The forecast for salary growth in India indicates a modest improvement in 2026, providing some relief to employees after a period of restrained wage increases. According to recent surveys, the average salary hike is expected to reach 9.1%, reflecting a slight uptick from the 8.9% increase observed in the previous year. The data suggests that while salary growth may not be experiencing rapid acceleration, it remains stable as companies manage business expansions alongside necessary cost control measures.

Real Estate and NBFC Sectors Expected to Lead Wage Increases

Specific sectors are projected to deliver more pronounced salary growth than others. The real estate and infrastructure sectors are anticipated to offer average salary hikes of around 10.2%, one of the highest across various industries. Non-banking financial companies (NBFCs) are also expected to provide substantial increases, with average hikes estimated at 10.1%. Manufacturing-related sectors are likely to show robust growth, with automotive and vehicle manufacturing businesses predicted to give raises of 9.9%, and engineering firms potentially experiencing increases of about 9.5%. The retail and life sciences sectors are also expected to remain above the average growth rate.

Technology Sector Shows Cautious Growth Trends

Conversely, not all sectors are predicted to experience strong salary increases. Technology consulting and services firms are projected to offer salary hikes of 6.6%, which falls below the national average. This reflects a more guarded approach following a period of aggressive hiring and salary increases during the technology boom. However, companies focused on technology platforms and product development are anticipated to report better increases, averaging around 9.4%, underscoring the continuing demand for specialized digital and product expertise.

Economic Factors Contributing to Salary Growth

According to industry insights, the improving economic landscape in India is aiding in the stability of salary growth. Factors such as strong domestic demand, decreasing inflation rates, and new trade opportunities are boosting employer confidence in long-term hiring and compensation strategies. Despite this positivity, many companies remain cautious, prioritizing sustainable pay structures over aggressive salary hikes.

Decline in Attrition Rates Noted

Further findings indicate that attrition rates have decreased, falling to 16.2% in 2025, down from 17.7% in 2024 and 18.7% in 2023. This downward trend marks a return to pre-pandemic levels, signifying an increasingly stable job market. Companies are adopting more selective hiring practices, and employees seem more inclined to remain in their current positions amid global uncertainties.

Impact of New Labour Laws on Salary Structures

Another critical aspect influencing salary growth is the introduction of new labour codes in India. These regulations standardize wage definitions and broaden social security coverage, prompting businesses to reevaluate their salary and benefits structures. Employers are focusing on clearer communication and balanced compensation packages to uphold employee trust during this transition.

Overall Outlook Indicates Stability with Caution

The overall forecast suggests moderate yet steady salary growth conditions in India. Although significant salary jumps may not be likely, consistent increases alongside enhanced job stability signify a healthier and more balanced employment atmosphere. For many workers, particularly in sectors like real estate, finance, and manufacturing, 2026 is poised to deliver improved compensation prospects as firms continue to invest in key talent.

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