S FAILURE--INVALID S iPhone 4

Hi. I have an factory unlocked iPhone 4 bought in Australia from the Apple store which was working perfectly in Australia when I was using 3 network. I had to move back to my India for a month and when I tried to use a service from my local carrier, it says Sim Failure and on the network space it displays Invalid Sim. I am able to use it for music and other applications though.
My initial doubt was with the sim I was using, so I switched carriers and still its the same. Though my 3 network sim from Australia works here in India (roaming). I dont know what is the issue here.
I tried to restore my iPhone and see if it fixes the problem, and I know since my iPhone is factory unlocked and purchased directly from Apple, after restoration it should get activated without any sim inside the phone, and go directly to the home screen bypassing the emergency call screen. But thats not the case. Its stuck in emergency call screen and its not accepting any sim other than my 3 sim from Australia for successful activation..
So is my iPhone not factory unlocked now? Or am I missing something?
iPhone 4 iOS 4 32 gigs iPhone 4 on iOS 4.2.1