India Inc is preparing for an average salary increase of 9.1 per cent in 2026, according to insights from Aon’s 32nd Annual Salary Increase and Turnover Survey 2025-26. This projection comes amid a cautiously optimistic outlook from employers navigating regulatory changes, global economic challenges, and sector-specific performance pressures.
The survey collected responses from more than 1,400 companies across 45 sectors, offering a comprehensive view of compensation trends across the country. Notably, while the projected hike for 2026 is slightly higher than the actual increase of 8.9 per cent in 2025, it remains lower than the initially forecasted 9.2 per cent last year, signaling that companies are continuing to exercise prudence in salary decisions.
Sector-wise trends reveal significant variation in expected salary hikes. Technology and IT services companies are expected to lead with above-average increases, reflecting strong demand for skilled professionals and competition for top talent. E-commerce and digital platforms are also likely to offer competitive pay rises to retain employees in high-growth roles. Similarly, financial services, including fintech and banking, are projected to maintain moderate-to-high increments, balancing talent retention with regulatory compliance and cost management.
Conversely, traditional manufacturing, retail, and certain service sectors are expected to adopt a more conservative approach. Companies in these segments continue to face cost pressures, slower growth, and operational challenges, which are likely to temper pay hike budgets. Organizations may also implement performance-linked incentives rather than across-the-board increases to manage payroll expenditure effectively.
The survey further highlights that turnover management remains a priority for HR leaders in India. As employees continue to explore opportunities for higher compensation, career growth, and flexible work arrangements, companies are strategically planning pay hikes to balance retention, engagement, and cost-efficiency. Employers are increasingly linking salary increments to individual performance, critical skills, and market benchmarks to ensure targeted investment in human capital.
Inflation, global economic uncertainty, and regulatory shifts have added complexity to compensation planning. Organizations are expected to align salary decisions with macroeconomic conditions, operational sustainability, and sectoral growth prospects. The incremental rise to 9.1 per cent in 2026 reflects a balance between rewarding talent and maintaining financial prudence.
Overall, the outlook for salary increments in 2026 demonstrates measured optimism. Companies are preparing for competitive pay structures while remaining mindful of broader economic pressures. Employees in high-demand sectors are likely to benefit the most, while those in cost-sensitive industries may see smaller increases.
As India Inc moves forward, salary hikes will not only reflect performance and market dynamics but also serve as a strategic tool for retaining talent, driving engagement, and sustaining growth in a rapidly evolving business environment.
