What makes India a federal country …

India is called a Federal country because of the following reasons-

(i) The constitution declared India as the Union of States.

(ii)The Constitution originally provided for a two-tier system of government.The Union Government (Central Government), and the State government.

(iii) Later the third tier of federalism was added in the form of Panchayats and municipalities.

(iv) The Constitution contains three lists -

(a)Union Lists includes subjects of national importance such as defence of the country, foreign affairs, banking, communications and currency.The Union government alone can make laws related to subjects mention in the list. 

(b)State Lists contains subjects of States and local importance such as police, trade, commerce, agriculture and irrigation.The State government alone can make laws related to subjects mention in the list.

(c)Concurrent List includes subjects of common interest to both the Union Governments, such as education, forest, trade unions, marriage, adoption and succession.Both the government can make the list.If their laws conflict with each other the laws made by the Union government will prevail.