India Inc is expected to roll out a 9.1% hike in 2026, with those employed in the real estate and infrastructure sectors and non-banking financial companies (NBFCs) touted to receive the highest increment.
Although a 9.1% may look higher than the actual hike of 8.9% rolled out in 2025, it must be noted that last year the expected hike was 9.2%.
Consulting firm Aon, which chalks out the compensation structure for many companies in India Inc, pointed out that while automotive and vehicle manufacturing, engineering design services, engineering and manufacturing will roll out higher than average increments, those in the technology consulting and services are looking at the lowest hikes amongst peers. Aon’s estimates are based on a study of 1,400 companies.
“Salary increments in banking sector are trending higher overall, largely driven by Indian banks as compared to multinational banks,” Roopank Chaudhary, partner and rewards consulting leader, Talent Solutions, India, for Aon. “Within multinational banks the smaller banks have been aggressive and offering bigger raises, especially for critical talent. Indian banks also show higher focus on performance differentiation and linking pay to productivity.”
The technology, consulting and services sector is expected to roll out a hike of 6.6% as compared to 7% last year, said Amit Kumar Otwani, associate partner, Talent Solutions, India, for Aon. “Technology, consulting and services organizations' profitability margins are under pressure, given that the employee cost as a percentage of revenue is higher within this sector as compared to other sectors. This sector has also been impacted by labour codes, while already grappling with advancements in AI and shrinking outsourcing budgets," Otwani said.
Any changes in the macro environment and within a sector will impact the final increments rolled out by a company.
For an employee, even a 9.1% increment may lead to little change in take-home salary since the real wage growth (inflation subtracted from increment) is expected to be around 5.1%.
Labour code impact
An increment hovering around 9% is also the result of companies absorbing the initial impact of labour codes. According to a Mint report published in February, 25 of India’s top 30 suffered a nearly ₹12,000-crore blow to their third-quarter profits in fiscal 2026. This is because the labour code mandates higher social security contributions from both employers and employees, while also boosting retirement benefits.
“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 said.
The study published on Tuesday showed that 73% of organisations are still assessing how to fund the Wage Code impact, with only 27% having a defined approach (12% using increment budgets and 15% using a separate pool).
“A majority are planning CTC restructuring, and among those, most are opting for a hybrid approach—increasing basic pay while adjusting allowances—rather than relying on a single lever. About 15% of companies report that their current structures are already compliant with the Wage Code,” the survey stated.
The study ‘Annual Salary Increase and Turnover Survey 2025-26 India’ also highlighted that the job market is tilted towards the employer. Aon’s data showed that the overall attrition declined to 16.2% in 2025, returning close to pre‐covid levels (16.1% in 2019) and extending a downward trend over the past three years. Attrition stood at 17.7% in 2024 and 18.7% in 2023.
The job market during the two years of pandemic saw an upsurge towards the later part as companies expanded feverishly to keep pace with digital expansion. The hiring frenzy ebbed, and now the firms are picking their talent, but in a measured manner.
In fact, consulting firm EY’s Future of Pay 2026 report predicted that salaries in India are likely to rise 9.1% in 2026. The report highlighted financial services, e-commerce, and life sciences and pharmaceuticals as top-performing sectors, while engineering, manufacturing, automotive and infrastructure are expected to see more moderate increments. It also underscored a growing shift toward skill-based pay, with AI and digital capabilities commanding significant premiums.