Indian Inc. Forecasts 2026 Compensation and Talent Development Trends
Steady Salary Increments Expected for Indian Employees
March to April is a crucial period for performance reviews in India, with many employees awaiting their salary increments. According to a Deloitte report, the average salary increments are expected to remain steady near 9% this year, with moderate differentiation across industries.
The report, Deloitte India Talent Outlook 2026, notes that the resilient macroeconomic environment and sector-specific growth dynamics have led to stable salary increment budgets across India Inc. Companies are projecting an average pay hike of 9.1% in 2026, a slight increase from the 9% seen in the previous year. The primary objective is to balance the need to retain critical talent with a strong push towards productivity and cost discipline.
Industry-Wise Increment Projections for 2026
| Industry | 2025 Increment | 2026 Increment |
|---|---|---|
| Financial Services | 11.5% | 10.2% |
| Manufacturing | 10.5% | 9.5% |
| Tech (Product) | 8.5% | 7.5% |
| Tech (Services) | 9.5% | 8.5% |
| Consumer Sector | 9.5% | 10.5% |
| Life Sciences and Pharma | 10.5% | 10.5% |
The financial services and manufacturing sectors are maintaining relatively higher pay increments to support growth and consequent hiring needs. On the other hand, tech companies are cautious, with both product and services sector players reducing projections by 10-70 basis points in 2026, compared to the previous year. Employees of consumer sector companies are marginally better placed, with expected pay increases of around 40 basis points, while life sciences and pharma companies are projecting around 10% hikes this year.
Criteria for Implementing Pay Hikes
Overall, the report notes that salary increments remain stable, and organisations continue to reward high performers and critical skills more aggressively by sharpening the bell curve. The share of employees with the highest rating on a five-point performance scale has declined by 300 basis points, from 10% in 2024 to 7% in 2025. Meanwhile, around 16% of the workforce is now categorised within the bottom two performance ratings.
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Promotion Rates and Attrition
Promotion rates have increased from 12% in 2024 to 14% in 2025, with manufacturing and operationally intensive organisations observing higher growth. Notably, promotion rates are now nearly twice the proportion of top-rated performers, indicating that companies are rewarding current top performers and future potential. Attrition has also increased, with numbers inched up 17.6% in 2025, compared to 17.4% in 2024.
Skills-Based Approach to Talent Development
Organisations are rapidly embedding a skills-based approach to talent development, with competency frameworks now widely institutionalised. Around 75% of companies have both behavioural and technical competency frameworks, which are increasingly being integrated across performance management. The learning operating model has shifted to a digital mode, with virtual learning now nearly 70% of training delivery. However, in-person learning has greater outcomes, and companies are facing structural challenges such as assessing skill gaps and keeping pace with rapidly evolving technologies.
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