Average salaries in India Inc. are expected to rise by 9 per cent in 2026, even as companies face a tougher economic environment, according to Mercer India’s latest Total Remuneration Survey (TRS) released on Wednesday.
The survey, covering pay trends across more than 8,000 roles in over 1,500 organisations, finds that employers are balancing cost pressures with the need to hold on to key talent, and are redesigning pay structures around skills and performance.
Mercer says the 9 per cent projected median salary increase for 2026 is driven by familiar factors such as individual performance, an employee’s position in the salary range, inflation and how competitive the organisation needs to be in the job market.
At the same time, companies are moving beyond just base pay to offer a more holistic “employee value proposition” that includes benefits, work flexibility and career growth, which is becoming essential in a tight talent market.
High Tech (AI product and consulting) and the automotive industry are forecast to see the highest salary hikes at 9.3 per cent and 9.5 per cent respectively, while sectors like shared services/GCCs, life sciences and consumer and retail are expected to remain flat compared to last year’s increase levels.
Malathi KS, Rewards Consulting Leader at Mercer India, said most organisations will “continue to plan pay increases in line with balancing cost pressures and talent retention”, while placing greater emphasis on skills-based organisation structures and talent assessments.
As companies respond to digital transformation, the hunt for scarce, in-demand skills and rising expectations on benefits and well-being, they are reworking rewards strategies to build a “more resilient and future-ready” workforce, she added.
Mercer’s post-survey insights show that voluntary attrition across Indian industries has hovered in the low to mid-teens in recent years, reinforcing the need for thoughtful retention strategies.
The survey highlights a clear shift towards short-term incentives such as bonuses and more transparent, skills-linked pay systems. Employers are using these tools to sharpen near-term performance focus, manage costs, and link pay to how effectively employees acquire and deploy new capabilities, especially as AI and productivity become boardroom priorities.
The findings also stress that the implementation of newly approved labour codes is expected to strengthen the social security net and preventive healthcare coverage for employees. Sectors like IT, ITES and Global Capability Centres continue to lead in progressive benefits, underlining their role as early adopters of flexible working, health cover and other people-centric policies.