Companies in India are expected to maintain average salary hikes of 9 per cent in 2026, matching the growth seen last year, according to Mercer’s Total
Remuneration Survey covering over 1,500 organisations. The survey highlights that the manufacturing and engineering sector, along with the automotive industry, will lead with projected increases of 9.5 per cent, while global capability centres (GCCs) are expected to offer hikes of 9 per cent. “The steady merit increase level in India reflects a balance between a stable yet cautious economic environment, a moderating talent market with attrition rates also being stable, and organisational priorities on cost control and performance differentiation,” Malathi KS, rewards consulting leader-India at Mercer, told The Economic Times. Focus On Incentives And Talent Retention The survey indicates that companies are increasingly refining their reward structures, placing greater emphasis on short-term incentives. This shift reflects a strategic approach aimed at attracting and retaining top talent while keeping costs under control. Organisations are clearly balancing financial discipline with the need to reward high-performing employees in an environment of moderate growth. Hiring Plans And Attrition Trends Hiring intentions are becoming more cautious with time. The proportion of companies planning to expand their workforce is expected to drop from 43 per cent in 2024 to 32 per cent in 2026, while those undecided about staffing plans rise to 31 per cent, highlighting uncertainty in workforce expansion strategies. At the same time, both voluntary and involuntary attrition rates are declining. Voluntary attrition across industries has fallen from 13.1 per cent in 2023 to 6.4 per cent in the first half of 2025, while involuntary attrition decreased from 2.9 per cent to 1.6 per cent over the same period. This trend suggests a more stable employee base, which could provide companies with a stronger foundation as they navigate evolving economic conditions.
