India Inc. is expected to offer an average salary increase of 9% in 2026, signalling stable compensation growth even as companies navigate global economic uncertainty, according to the Aon Annual Salary Increase and Turnover Survey 2025-26 (Phase I). The report, based on inputs from over 1,000 organisations across 45 sectors, highlights a shift toward disciplined pay strategies and stronger performance-linked rewards.
The projected 9% increment is marginally higher than the 8.9% average salary hike recorded in 2025, reflecting a steady approach to compensation planning after years of volatility following the pandemic.
Salary increments in India have gradually stabilised in the high single-digit range, compared with double-digit growth in earlier years. The survey notes that organisations are prioritising cost discipline, productivity improvements, and targeted rewards for high performers, rather than broad-based pay increases.
Notably, 45% of companies expect salary hikes below 9% in 2026, while a smaller segment will continue offering double-digit increments for critical skills and top talent.
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Junior managers and professionals are likely to receive the highest increments at about 9.5%, reflecting intense demand for early-career and technical talent. In comparison, top executives are expected to see about 8.5% growth, indicating relatively stable leadership compensation.
Salary growth varies significantly across industries. The real estate and infrastructure sector recorded the highest salary increase of 10.5% in 2025, while technology consulting and services saw the lowest at around 7%.
For 2026, sectors such as aerospace, renewables, semiconductor, and financial services are expected to maintain relatively strong pay growth, whereas traditional IT services may continue to see moderate increments.
The survey highlights a clear decline in employee attrition, suggesting a stabilising job market. Overall attrition dropped to 17.1% in 2025, down from the pandemic-era peak of 21.4% in 2022.
However, turnover remains high in some sectors. Life insurance, NBFCs, e-commerce, and retail reported the highest attrition rates, driven by rapid expansion and intense competition for talent. In contrast, telecommunications, semiconductor, and manufacturing sectors recorded relatively lower workforce turnover.
The report underlines a growing emphasis on merit-based rewards. Employees who “far exceeded expectations” received an average salary hike of 13.7%, significantly higher than the 8.1% increase for those who met expectations.
Overall, top performers receive about 1.7 times higher salary increases than average performers, underscoring a stronger pay-for-performance culture in Indian companies.
Despite global headwinds such as geopolitical tensions and slower demand in Western markets, Indian companies remain optimistic about growth prospects. Nearly two in five organisations expect revenue growth of over 10%, supported by domestic demand and improving real wage growth as inflation moderates.
Experts say companies are entering FY2026 with a balanced approach — rewarding critical talent while maintaining financial discipline — as they adapt to evolving economic conditions and workforce expectations.
