Step 1: Understanding the Concept:
The Shimla Agreement was a peace treaty signed after the 1971 India-Pakistan war, which had also led to the creation of Bangladesh (formerly East Pakistan).
Step 2: The date and the parties.
It was signed on 2 July 1972 in Shimla, India, between Prime Minister Indira Gandhi of India and President Zulfikar Ali Bhutto of Pakistan.
Step 3: What it decided.
The agreement committed both countries to settle their disputes, including Kashmir, peacefully through bilateral talks rather than involving outside countries or the United Nations. It also converted the ceasefire line in Kashmir into the "Line of Control" and arranged for the return of prisoners of war and captured territory.
Final Answer:
The Shimla Agreement was signed on 2 July 1972 between Indira Gandhi and Zulfikar Ali Bhutto, following the 1971 war.