An evolutionary model for emergence of diversity in language is developed. We investigated the effects of two real life observations, namely, people prefer people that they communicate with well, and people interact with people that are physically close to each other. Clearly these groups are relatively small compared to the entire population. We restrict selection of the teachers from such small groups, called imitation sets, around parents. Then the child learns language from a teacher selected within the imitation set of her parent. As a result, there are subcommunities with their own languages developed. Within subcommunity comprehension is found to be high. The number of languages is related to the relative size of imitation set by a power law.