Average increase in salaries to be 9%, focus on short-term incentives
The survey covers remuneration trends across over 8,000 roles across more than 1,500 companies
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Andrii Yalanskyi
Average employee salaries in India are likely to increase by 9 per cent in 2026 while employers focus on refining packages with short-term incentives and skill-based pay frameworks, a survey by Mecer stated.
According to Mercer’s Total Remuneration Survey, organisations in India are shifting toward broader and more holistic value-propositions. It outlined that the top factors influencing salary increases include individual performance, position in salary range, inflation and the organisation’s competitiveness in the job market.
The survey covers remuneration trends across over 8,000 roles across more than 1,500 companies.
Malathi KS, Mercer’s Rewards Consulting Leader India said, “Our survey shows most organisations in India will continue to plan pay increases in line with balancing cost pressures and talent retention. Alongside this, there is a growing emphasis on skills-based organisation architecture, talent assessments to better align workforce capabilities with evolving business needs and pay programs to drive desired outcomes.” She added that companies are redesigning rewards strategies to build a more resilient and future-ready talent. “These shifts present Indian organisations with significant opportunities to strengthen workforce engagement and shape a more agile and inclusive workplace,” she said.
Short-term incentives such as bonuses have led to a stronger emphasis on near-term performance alignment, cost efficiency, and building skills-based pay frameworks amidst AI and productivity priorities, the survey findings revealed. It also noted that implementation of newly approved labour codes will tighten the social security net as well as preventive health care, at large.
In terms of sectors, high tech (product and consulting) and the automotive industry are set to have the highest salary increases in 2026 at 9.3 per cent and 9.5 per cent respectively, while the IT, ITES, and Global Capability Centres (GCC) sector in India continued to lead the way in offering innovative and progressive employee benefits reflecting the sector’s commitment to enhancing employee well-being and engagement.
“As India embraces digital transformation, navigates shifting workforce expectations and sharpens its focus on productivity, revisiting the number of employees eligible to receive an increment, is a strategy being adopted by some companies to manage cost,”Mercer’s Career Business Leader, India, Mansee Singhal added.
Published on December 17, 2025
