NEW DELHI, India — Average employee salaries in India are projected to rise by a median 9% in 2026, driven by factors such as individual performance, position within salary bands, inflation, and employers’ competitiveness in the job market, according to a report released Wednesday by Mercer.
The report, published by Mercer, a business of Marsh McLennan, said organizations across India are increasingly shifting toward broader and more holistic value propositions as they seek to differentiate themselves in a tight and evolving labor market.
It noted that companies are continuing to refine their rewards structures, with a stronger focus on short-term incentives and a move toward more transparent systems based on skills acquisition and deployment. These changes reflect efforts to balance cost discipline with the need to attract, motivate, and retain high-impact talent.
Short-term incentives such as bonuses are being used to strengthen alignment with near-term performance goals, improve cost efficiency, and support the development of transparent, skills-based pay frameworks. The report said these measures are becoming more important as organizations adapt to the growing influence of artificial intelligence and productivity-focused workforce strategies.
The report also highlighted that the implementation of newly approved Labour Codes is expected to strengthen social security coverage and preventive healthcare provisions across the workforce.
“Our survey shows most organizations in India will continue to plan pay increases while balancing cost pressures and talent retention,” said Malathi KS, Mercer’s Rewards Consulting Leader in India. She added that companies are placing greater emphasis on skills-based organizational design, talent assessments, and pay programs that better align workforce capabilities with evolving business needs.
According to the report, the highest salary increases in 2026 are expected in the high-tech and automotive sectors, with projected hikes of 9.3% and 9.5%, respectively.
“As India embraces digital transformation, navigates shifting workforce expectations and sharpens its focus on productivity, revisiting the number of employees eligible for increments is a strategy being adopted by some companies to manage costs,” said Mansee Singhal, Mercer’s Career Business Leader. (Source: IANS)
