According to Mercer's Total Remuneration Survey, which covers more than 1,500 organizations, companies in India are predicted to retain average compensation increases of 9% in 2026, matching the trend observed last year. According to the report, global capability centers (GCCs) are anticipated to provide growth of 9%, while the manufacturing and engineering sector and the automotive industry are predicted to lead with rises of 9.5%.

"A stable but cautious economic environment, a moderating talent market with stable attrition rates, and organizational priorities on cost control and performance differentiation are all reflected in India's steady merit increase level," Malathi KS, rewards consulting leader-India at Mercer, told.

Key Highlights

• India Inc is expected to grant average salary increases of around 9% in 2026.
• Manufacturing, automotive, and high-tech sectors are projected to lead with slightly higher increments.

Focus on Incentives and Talent Retention

According to the poll, corporations are rapidly refining their reward schemes, focusing more on short-term rewards. This adjustment demonstrates a purposeful strategy to attracting and retaining top people while maintaining cost control. Organisations are obviously juggling financial discipline with the desire to reward high-performing personnel in a moderate-growth environment.

Also Read: TeamLease Predicts 6.2%-11.3% Salary Hikes Across Industries

Hiring plans and attrition trends

The hiring intentions are getting more cautious with time. The number of enterprises expecting to expand their workforce is predicted to fall from 43% in 2024 to 32% in 2026, while those hesitant about staffing plans will rise to 31%, emphasizing the uncertainty in workforce expansion strategies. At the same time, voluntary and involuntary attrition rates are decreasing. 

Voluntary attrition across industries fell from 13.1% in 2023 to 6.4% in the first half of 2025, while involuntary attrition fell from 2.9% to 1.6% during the same time period. This trend indicates a more stable workforce base, which might give businesses a firmer foundation as they navigate changing economic conditions.