Indian Businesses Expected to Grant Average Salary Increases of 9.1% in 2026, Aon Survey Suggests

India Inc to Roll Out 9.1% Salary Hike for 2026

Aon's 32nd Annual Salary Increase and Turnover Survey 2025-26 India reports that India Inc is expected to experience a 9.1% salary hike in 2026, a moderate increase compared to the previous year's 8.9% actual salary growth.

Key Findings

• The survey covered over 1,400 organisations across 45 industries.
• Salary increases are projected to vary by industry, with the real estate and infrastructure sectors, as well as non-banking financial companies (NBFCs), expected to deliver the highest salary growth in 2026.
• The automotive and vehicle manufacturing, engineering design services, engineering and manufacturing, and retail sectors are also projected to offer slightly higher-than-average salary hikes.

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Industry Insights

• Resilient domestic demand, moderating inflation, and new trade agreements are contributing to a positive medium-term outlook for India Inc.
• 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.

Historical Context

• Salary increases have steadily moderated over the past decade, with the average increment in 2015 reaching 10.4%, according to Aon.

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Labour Code Impact

• India Inc is grappling with the impact of labour code implementation, which includes higher social security contributions from both employers and employees, as well as boosted retirement benefits.
• The labour code has resulted in a ₹12,000-crore blow to the third-quarter profits of 25 of India's top 30 companies in fiscal 2026.

Market Outlook

• The moderation in hikes arrives amid challenges from tariff restructuring, global trade wars, and the AI boom displacing jobs in the IT sector.
• EY's Future of Pay 2026 report predicts that salaries in India are likely to rise 9.1% in 2026, with financial services, e-commerce, and life sciences and pharmaceuticals as top-performing sectors.

Key Takeaways

• Organisations are navigating one of the most significant regulatory transitions in decades with the implementation of India's labour codes.
• Employers are reassessing and restructuring compensation in response to the standardised definition of wages and expanded social security provisions.
• Clear communication around these changes will be critical to maintaining workforce trust and stability.