The agreement was agreed upon and signed after the 1971 Indo-Pak War, after which East Pakistan was liberated, leading to the formation of Bangladesh. At the end of the historic summit, India and Pakistan signed the Lahore Declaration, a bilateral agreement and a governance treaty that was to be ratified by the parliaments of both countries in the same year. As mentioned 27 years earlier in the Simla Agreement, the Lahore Declaration notably confirmed the need to resolve the Kashmir issue bilaterally. According to historian Ramachandra Guha, India wanted a „comprehensive treaty to solve all outstanding problems,“ while Pakistan preferred a „piecemeal approach.“ Although India wanted a treaty, it reached an agreement because of the bitter negotiations of the Pakistanis. The Simla Agreement was signed on 3 July 1972 in Shimla, the capital of the Indian state of Himachal Pradesh, between India and Pakistan.  This led to the war of liberation of Bangladesh in 1971, which led to the independence of Bangladesh, formerly known as East Pakistan and part of the territory of Pakistan. India entered the war as an ally of Bangladesh, which turned the war into an Indo-Pakistan war in 1971.  Six months after the liberation of Bangladesh, then Prime Minister Indira Gandhi and former Pakistani President Zulfiqar Ali Bhutto met on 2 July 1972 in Shimla to sign an agreement that provides a framework for a mutual settlement of their differences. The Simla Agreement, signed on 2 July 1972 by Prime Minister Indira Gandhi and Pakistani President Zulfikar Ali Bhutto, was much more than a peace treaty aimed at reversing the consequences of the 1971 war (i.e. the withdrawal of troops and the exchange of prisoners of war).
It was a blue impression for good-neighbourly relations between India and Pakistan. As part of the Simla Agreement, the two countries pledged to end the conflicts and confrontations that have affected relations in the past and to work towards lasting peace, friendship and cooperation. The Simla Agreement contains a number of guiding principles on which India and Pakistan have agreed and which both sides would adhere to in the management of relations between them. They insist on respect for the territorial integrity and sovereignty of the other; non-interference in the internal affairs of the other; respect for unity, political independence; sovereign equality; and hostile propaganda. However, the following principles of the agreement are particularly noteworthy: Donald Trump`s offer to help India and Pakistan resolve the Kashmir issue became a major controversy after India rejected the US president`s assertion that Prime Minister Narendra Modi had filed a request to do so.