Average increment in India is expected to be 9.1 percent in 2026, compared with 9.0 percent in 2025: Deloitte India Talent Outlook 2026

Apr 6: Against the backdrop of a resilient macroeconomic environment and evolving sectoral dynamics, salary increment budgets across India Inc. are expected to remain stable in 2026, according to the latest findings from Deloitte India Talent Outlook. Companies are projecting an average pay increase of 9.1% for 2026, marginally higher than the 9.0% recorded in 2025.

The report highlights a shift towards a more calibrated and balanced compensation strategy, as organizations aim to retain critical talent while maintaining strong productivity and cost discipline. While overall increments remain steady, variations across industries reflect differing growth trajectories and hiring needs.

Sectors such as manufacturing and financial services are expected to maintain relatively higher salary increases to support expansion and workforce demand. Meanwhile, the technology sector is adopting a cautious stance, with both product and services companies reducing increment projections by 10–70 basis points compared to last year. On the other hand, the consumer sector anticipates a modest improvement in salary growth, while the pharmaceutical and life sciences sectors are among the top performers, with projected increases nearing 10%.

Despite stable increments, organizations are increasingly differentiating rewards based on performance and critical skills. The report notes a sharper bell curve in performance ratings, with the proportion of employees receiving top ratings declining from 10% in 2024 to 7% in 2025. At the same time, nearly 16% of employees now fall within the bottom two performance categories, indicating stricter performance evaluation standards.

Commenting on the findings, Anandorup Ghose, Partner at Deloitte India, said,

“The last few years have seen most organisations revert to operating within a narrow spectrum of salary increases. Talent decisions are increasingly influenced by a buyer’s market across most skill categories, with a stronger focus on productivity and targeted skilling investments.”

Interestingly, while top performance ratings have declined, promotion rates have increased from 12% in 2024 to 14% in 2025. This suggests that organizations are not only rewarding current performance but also recognizing future potential and readiness. However, experts caution that this trend must be managed carefully to avoid long-term title inflation.

Attrition levels have remained largely stable, edging up slightly to 17.6% in 2025 from 17.4% in 2024. This marginal increase does not indicate a significant surge in hiring activity, as part of it is attributed to involuntary attrition. The stable attrition trend, coupled with unchanged increment levels, signals a stabilizing labour market.

The report also highlights a growing talent pool emerging from Tier-2 and Tier-3 cities, alongside stronger campus hiring pipelines. Organizations are increasingly adopting a skills-based approach to talent development, with nearly three-quarters implementing structured competency frameworks that integrate performance management, learning, and career development.

Learning and development models are undergoing a digital transformation, with virtual learning now accounting for nearly 70% of training delivery. However, companies acknowledge that in-person learning continues to deliver stronger outcomes. Key challenges remain in measuring the impact of learning initiatives, identifying skill gaps, and keeping pace with rapidly evolving technologies, with nearly 60% of organizations citing these as major concerns.

Industry-wise projections reveal notable trends. Pharmaceuticals, clinical research organizations, automotive OEMs, and renewable energy sectors are expected to lead salary growth, with increments exceeding 10% in some cases. In contrast, sectors such as IT services, telecommunications, and media & entertainment are expected to witness relatively lower salary increases.

As India Inc. enters 2026, the focus is clearly shifting from broad-based salary hikes to targeted, performance-driven rewards, supported by stronger talent strategies and evolving workforce dynamics.