“Alongside Esteban, retaining Sergio gives us stability going into next season and one of the most exciting driver pairings in Formula One,” said the fourth-placed team’s co-owner and principal Vijay Mallya.
Perez, who had been linked with other teams including Renault who have now opted for Spaniard Carlos Sainz, said staying was always his priority.
“It’s a team that has allowed me to show my talents as a driver and I feel very happy here. I’m proud of everything we have already achieved together and I think there is more to come,” he said.
(Reporting by Alan Baldwin, editing by Sudipto Ganguly)