India’s labour market is projected to see an average salary increase of 9.1% in the financial year 2026, according to the 32nd edition of Aon’s Annual Salary Increase and Turnover Survey 2025‑26.
The survey covered more than 1,400 organisations across 45 industries. The overall rise moves from 8.9% in 2025 to 9.1% in 2026. Sectors with the highest projected hikes include real estate, infrastructure and non banking financial companies.
Other sectors offering above‑average increases are live events, automotive manufacturing, engineering design services, engineering manufacturing and retail.
Specific industry figures show automotive manufacturing moving from 9.8% to 9.9%, banking from 8.4% to 8.8%, chemicals from 8.5% to 8.3% and engineering design services from 10% to 9.9%.
Employee attrition is reported to have fallen to 16.2% in 2025, down from 17.7% in 2024 and 18.7% in 2023. The decline suggests a return to pre pandemic stability and a shift in employer focus towards upskilling and long‑term talent pipelines.
Read More: Kerala Constitutes 12th Pay Revision Commission To Review State Employee Salaries!
With the recent notification of India’s labour codes, organisations are adjusting compensation structures. Seventy three percent of firms are still evaluating funding options for the wage code impact.
Twelve percent plan to use salary increment budgets, while fifteen percent are creating separate funding pools.
Regarding restructuring, thirty five percent intend to raise basic pay to meet the 50% wage threshold, thirty four percent will adopt a hybrid approach adjusting both basic pay and allowances, and fifteen percent report existing compliance.
India’s projected 9.1% rise exceeds the increases reported in major economies such as the United States (4.3%), United Kingdom (4.1%), Germany (3.9%), Japan (3.7%), China (4.8%), Singapore (4.2%), Australia (3.9%) and Brazil (4.9%). The higher rate aligns with India’s GDP growth forecast of around 6.2% for 2026.
The data indicates a modest acceleration in salary growth for 2026, driven by sectoral demand and regulatory changes. Attrition is easing, and many firms are revising compensation to comply with the new wage code while maintaining competitive pay levels.
Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Feb 26, 2026, 1:41 PM IST
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