There are many reasons behind India's move
- One of the reasons is that India wanted peace in Kashmir region.
Indian forces captured around 5,795 square miles (15,010 sq.km) land
in the West but returned it in the Simla Agreement as a gesture of
- Wikipedia Article on Indo-Pakistan war 1971.
- Recognition of Bangladesh. I consider this as the most important reason.
Bangladesh was one of the nations to be quickly recognized by UNO. This would not have happened if India has held Pakistan's territory in it's possession.
When Bangladesh applied for membership to the United Nations in 1972,
China vetoed their application because two United Nations
resolutions regarding the repatriation of Pakistani prisoners of war
and civilians had not yet been implemented. ref
India was an ally with Bangladesh. Recognition of Bangladesh was important for India too. India would have made truce with Pakistan for the sake of Bangladesh.
- India was looking for Peace.
India wanted peace. After fighting two wars within 10 years, may be Indian leaders were looking for opportunities to decrease tensions with others world powers. Clearly, this treaty conveyed a clear message that India does not want to solve it's issues through war.