India Inc is likely to implement an average salary increase of 9.1 per cent in 2026, based on findings from the consulting firm Aon. The projection reflects cautious optimism among employers navigating regulatory shifts and global headwinds. The estimate comes from the firm’s 32nd Annual Salary Increase and Turnover Survey 2025-26 India, which covered more than 1,400 companies spanning 45 sectors.
Notably, actual pay raises in 2025 stood at 8.9 per cent, falling short of the earlier 9.2 per cent forecast, a sign that companies are tightening compensation budgets amid evolving business conditions.
Compensation growth will not be uniform across industries. Real estate, infrastructure and non-banking financial companies (NBFCs) are poised to post the strongest increments. Automotive and vehicle manufacturing, engineering design services, core engineering and manufacturing, along with retail, are also expected to grant marginally better-than-average raises. “Resilient domestic demand, moderating inflation and new trade agreements are contributing to a positive medium‐term outlook, even as firms navigate geopolitical uncertainty,” said Roopank Chaudhary, partner and rewards consulting leader, Talent Solutions, India, for Aon.
“Stronger salary growth in sectors such as real estate, NBFCs and manufacturing underscores employers’ intent to invest in critical talent while building more sustainable compensation strategies,” Chaudhary added.
Despite the upbeat projections, long-term data show that annual increments have gradually cooled. Back in 2015, companies rolled out average raises of 10.4 per cent, marking a noticeable slowdown over the past decade.
Labour Code Rollout Adds Cost Pressures
The softer pay hikes come as corporate India adjusts to sweeping labour reforms. The labour code framework requires higher social security contributions from both employers and employees while enhancing retirement benefits. This shift has increased payroll-related costs and forced businesses to rethink compensation structures.
“With India’s labour codes now notified, organisations are navigating one of the most significant regulatory transitions in decades,” said Amit Kumar Otwani, associate partner, Talent Solutions, India, for Aon.
“The standardised definition of wages and expanded social security provisions are prompting many employers to reassess and restructure compensation. Clear communication around these changes will be critical to maintaining workforce trust and stability,” Otwani added.
Global Uncertainty And AI Disruption
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