How Skills-Based Rewards are Shaping India’s 2026 Salary Trends
In a move that signals a stabilizing yet competitive corporate landscape, employee salary in India are projected to rise by an average of 9 per cent in 2026.
According to the latest Total Remuneration Survey (TRS) by global HR consulting firm Mercer, the Indian automotive and high-tech sectors are set to outpace the national average, offering the most aggressive increments to attract and retain specialized talent.
Salary Trends Sector Leaders: Automotive and High-Tech Take the Front Seat
The survey, which analyzed remuneration trends across more than 1,500 companies and 8,000 roles, highlights the Automotive Industry as the frontrunner, with a projected salary hike of 9.5 per cent.
Closely following is the High-Tech sector (specifically product development and consulting), with an expected increase of 9.3 per cent.
Analysts largely attribute this surge in the automotive sector to the rapid transition toward Electric Vehicles (EVs) and the government’s Production-Linked Incentive (PLI) schemes.
As companies race to build future-ready manufacturing ecosystems, the demand for niche engineering and sales talent has reached an all-time high.
Similarly, the high-tech sector continues to reward professionals who can navigate the complexities of Artificial Intelligence (AI) and digital transformation.
Stabilization in Other Key Segments
While the auto and tech sectors lead the charge, other sectors are seeing more moderate growth.
Global Capability Centres (GCCs)—once the primary drivers of massive wage jumps—are projected to offer a steady 9 per cent hike, aligning with the national median.
Meanwhile, shared services, life sciences, and consumer retail sectors maintain a relatively flat trajectory compared to previous years.
Interestingly, while the overall 9 per cent figure matches the growth seen in 2025, hiring intentions are showing signs of caution.
Only 32 per cent of organizations plan to expand their workforce in 2026, down from 43 per cent in 2024, indicating that firms are prioritizing the quality and productivity of their current staff over massive headcount additions.
A Shift Toward “Holistic” Value Propositions
The 2026 outlook reveals a fundamental shift in how Indian companies reward their employees.
Rather than relying solely on base pay, employers are focusing on short-term incentives (STI) like performance bonuses and transparent, skills-based pay frameworks.
Malathi KS, Rewards Consulting Leader at Mercer India, noted that organizations are balancing cost pressures with the need to hold on to high-impact talent.
“There is a growing emphasis on skills-based architecture and talent assessments,” she stated.
This “holistic” approach includes enhanced wellness benefits, flexible work arrangements, and career development pathways, particularly in the IT and ITES sectors, which continue to lead in innovative employee perks.
Salary Trends: Global Context and Economic Drivers
India continues to be one of the fastest-growing salary markets globally.
For comparison, developed economies like the US, UK, and Japan typically see increments in the 2 per to 4 per cent range.
Factors driving India’s resilience include individual performance metrics, inflation adjustments, and the implementation of new labor codes that strengthen social security and healthcare nets.
As the 2026 cycle approaches, the message for professionals is clear: those with in-demand digital skills and those contributing to the high-growth automotive and tech ecosystems will remain the most valued assets in India Inc.
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