India Salary Appraisals Average 9 Per Cent in 2026, Highest Among Major World Economies: Aon Report
Aon’s Annual Survey Projects India at the Top of Global Salary Growth Table
India’s employees are set to receive the highest salary increases among all major world economies in 2026, according to the latest Annual Salary Increase and Turnover Survey by global professional services firm Aon plc. The study projects that average salaries in India will grow by 9 per cent in 2026, a slight improvement over the actual 8.9 per cent increase recorded in 2025. This marks a continuation of India’s position as a global outlier in wage growth, even as economic growth slows across much of the developed world.
The survey, now in its 31st year, is one of the largest and most comprehensive compensation studies in India. It analyses data from over 1,060 companies across 45 industries, providing a granular picture of how Indian employers are rewarding their workforce. At a time when India’s GDP growth has been revised upward to 7.6 per cent, the robust salary outlook reflects the broader confidence in the Indian economy’s trajectory.
Which Sectors Are Offering the Highest Salary Hikes
The Aon report reveals significant variation across industries. Real estate and infrastructure leads the pack with a projected salary increase of 10.9 per cent, up from an actual 10.5 per cent in 2025. This is driven by the ongoing housing boom in Tier-1 and Tier-2 cities, massive government spending on infrastructure projects, and strong demand for skilled professionals in construction, project management, and urban planning.
Non-banking financial companies (NBFCs) follow closely with a projected increase of 10.0 per cent, reflecting the sector’s continued expansion into credit, microfinance, and digital lending. NBFCs have been aggressively hiring to support their growth in semi-urban and rural markets, pushing compensation higher to attract and retain talent.
Sector-by-Sector Breakdown
Here is how different industries compare in terms of projected salary growth for 2026:
- Real Estate and Infrastructure: 10.9 per cent (actual 2025: 10.5 per cent)
- NBFCs: 10.0 per cent (actual 2025: 9.8 per cent)
- Engineering Design Services: 9.7 per cent (actual 2025: 9.6 per cent)
- Life Sciences: 9.6 per cent (actual 2025: 9.6 per cent)
- Automotive and Vehicle Manufacturing: 9.6 per cent (actual 2025: 9.8 per cent)
- Retail: 9.6 per cent (actual 2025: 9.0 per cent)
- Global Capability Centres: 9.5 per cent (actual 2025: 9.4 per cent)
- E-commerce: 9.2 per cent (actual 2025: 8.9 per cent)
- Engineering and Manufacturing: 9.2 per cent (actual 2025: 9.4 per cent)
- FMCG/FMCD: 9.1 per cent (actual 2025: 9.0 per cent)
- Banking: 8.6 per cent (actual 2025: 8.5 per cent)
- Chemicals: 8.8 per cent (actual 2025: 8.5 per cent)
- Technology Consulting and Services: 6.8 per cent (actual 2025: 7.0 per cent)
The data shows that technology consulting and IT services — one of India’s largest employers — is at the bottom of the salary hike table with a projected increase of just 6.8 per cent, slightly down from 7.0 per cent last year. This reflects the sector’s cautious hiring approach amid concerns about global demand, AI-driven automation, and ongoing restructuring at major IT firms. Companies like TCS have pivoted toward AI revenue streams but traditional service roles continue to see moderated growth.
Why India Leads the World in Salary Growth
India’s 9 per cent average salary increase stands in stark contrast to projections in other major economies. The United States is expected to see salary growth of around 3.5 to 4 per cent, while Europe is projected at 3 to 3.5 per cent. China’s salary growth has moderated to around 5 to 6 per cent as the country grapples with a slowing property sector and muted consumer demand. Even other fast-growing Asian economies like Vietnam and Indonesia are projected at 7 to 8 per cent, below India’s mark.
Several structural factors explain India’s outperformance:
First, the labour market remains tight in critical skill areas. India faces a significant demand-supply gap in fields like artificial intelligence, data science, cybersecurity, advanced manufacturing, and healthcare. Companies are willing to pay premium increases to attract and retain professionals in these high-demand roles.
Second, India’s GDP growth trajectory supports employer confidence. With the economy growing at 7.6 per cent and the government continuing massive public investment in infrastructure, defence, and digital transformation, businesses see a favourable long-term outlook that justifies higher compensation spending.
Third, attrition rates remain elevated in several sectors. The Aon survey also tracks employee turnover, and sectors like technology, BFSI, and e-commerce continue to see high voluntary attrition rates. Higher salary increases are partly a retention strategy to reduce costly employee churn.
Impact on Consumer Spending and the Broader Economy
Higher salary growth has a direct multiplier effect on the Indian economy. Increased disposable income fuels consumer spending on everything from real estate and automobiles to travel, fashion, and dining out. The corporate governance landscape is also evolving as companies balance competitive compensation with responsible workplace policies.
The Reserve Bank of India has been monitoring wage growth closely as a component of its inflation management strategy. While higher wages boost demand, they also contribute to services inflation, which has been a persistent concern for the central bank. The RBI’s Monetary Policy Committee has flagged this dynamic in recent policy statements, noting that wage-push inflation could delay future rate cuts if it accelerates beyond current projections.
What Employees Should Know
For Indian employees, the 9 per cent national average is just that — an average. Individual salary increases can vary significantly based on performance ratings, the specific industry, the company’s financial health, the role’s market demand, and geographic location. Employees in high-demand roles in AI, cloud computing, and data engineering may see increases of 15 to 25 per cent, while those in commoditised roles may receive only 5 to 7 per cent.
The Aon report also notes that variable pay and bonuses are becoming an increasingly important component of total compensation in India. Many companies are shifting a larger portion of pay increases into performance-linked bonuses rather than base salary hikes, giving employers more flexibility while rewarding high performers disproportionately.
With the global economic landscape remaining uncertain, India’s ability to sustain salary growth at these levels will depend on continued GDP momentum, stable energy prices, and the government’s ability to manage the fiscal implications of its ambitious spending programmes.
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