Many scholars argue that India’s federal system positively affects the accommodation of diversity by enabling a power sharing of various territorial groups within a polity. This study recognizes the federal system as a political mechanism to deal with territorial claims and focuses on the following aspect of India’s federal experience: Throughout history, whenever different language and cultural groups made territorial claims, posing potential threats to national unity, India has flexibly changed its internal boundaries and reorganized the constituent units of the federation. This paper attempts to understand historically why and how such “flexibility” was made possible by revisiting India’s federating process and the founding fathers’ approach to territorial claims. The paper argues that, in the face of growing demands for “linguistic states”, political leaders came to show a concessionary gesture, and institutional arrangements were made in the Constituent Assembly to pave the way for the reorganization of states.