Under federalism, different states decide to come under a central authority and form a federation. Both the federal authority (which is also known as central authority) and the states operate in predecided areas as far as the making of enacting of laws is concerned. Areas like Defence and foreign affairs, Monetary control etc. remains under the jurisdiction of the central or Federal authority.There a list of common areas also exists, on which both the centre and the states can make laws, but when both the authorities make a law on any one subject/area, centre's law will prevail over the state's law. In India also, states have opted to come under a central authority. All this makesnIndia a federal country
India is called federal country since it has the government in state and one in the union.
division of powers verticlly
As the power is shared between the states and the centre india is called a federal country