According to Mercer’s Total Remuneration Survey 2026, employee salaries in India are expected to rise by an average of nine per cent in 2026. The highest increases are predicted in the automotive sector at 9.5 per cent and high tech industries such as product and consulting at 9.3 per cent. In contrast, sectors such as shared services organisations/global capability centre (SSO/GCC), life sciences, and consumer and retail are expected to remain flat.
The information technology (IT), IT-enabled services (ITES), and GCC sectors continue to stand out for offering innovative employee benefits, showing their commitment to well being and engagement. Even though the economic outlook is challenging, salary hikes will still depend on factors such as individual performance, inflation, an employee’s position in the pay range, and how competitive the organisation is in the job market.
The survey, which studied over 8,000 roles across 1,500 companies, highlights a shift in India toward more holistic value propositions. Employers are focusing not only on pay but also on building workplaces that attract and retain talent. Organisations are increasingly adopting skills based systems, talent assessments, and pay programmes that align workforce capabilities with changing business needs.
Short term incentives, such as bonuses, are becoming more important. These encourage near term performance, cost efficiency, and transparency in pay structures. Companies are also preparing for the impact of artificial intelligence (AI) and productivity demands by redesigning reward strategies. Additionally, new labour codes are expected to strengthen social security and preventive healthcare.
As India undergoes digital transformation, some companies are limiting the number of employees eligible for increments to manage costs. Leaders are being urged to create stronger workplace cultures that balance empowerment with accountability. The overall goal is to build agile, inclusive organisations that can adapt to future challenges while keeping employees motivated and engaged.
