Billy Irving, 37, is one of the so-called Chennai Six, who were first jailed in October 2013 while working as security guards on a ship in the Indian Ocean to combat piracy.
Customs officials initially boarded the vessel and were said to have discovered dozens of firearms and almost 6,000 rounds of ammunition.
Charges against the men, all of whom are British, were initially dropped, but they were forced to remain in India while prosecutors pursued an appeal.
The charges against the former soldiers were later reinstated and they were sentenced to five years last January.
However, following an appeal, a judge ruled yesterday that the men should be freed.
Yvonne McHugh, who is engaged to Mr Irving – from Connel in Argyll & Bute – said she was “over the moon” the men had been freed, describing it as a “dream come true.”
During Mr Irving’s time in India, he missed the birth of the couple’s son, William. Ms McHugh, who has campaigned for the men’s release, said she felt “sheer relief” that “finally we’re getting our family back together.”
She added: “They’ve been acquitted of all charges, so they have done no wrongdoing and finally we’ve proven that.”
Ms McHugh said she had not yet been able to speak to Mr Irving by phone, but said that the families “just want them home as soon as possible.”
Those held in prison alongside Mr Irving were: Nick Dunn, 31, of Ashington, Northumberland; John Armstrong, 30, of Wigton, Cumbria; Nicholas Simpson, 47, of Catterick, North Yorkshire; Ray Tindall, 42, of Chester; and Paul Towers, 54, of Pocklington, East Yorkshire.
Mr Dunn’s sister, Lisa, was among those to express relief at the court ruling yesterday.
She said: “The longer it went on, as much as you still have an element of hope, it does dwindle after having so many delays and setbacks.
“But that hasn’t happened today and we’ve had the best news ever. It will make all of our Christmases, all of our dreams have come true today.”
News of the men’s acquittal reached Downing Street, which said it will continue to offer consular assistance to the men.
Prime Minister Theresa May’s official spokesman said the UK government shared the families’ happiness at the court’s decision.