Salaries in India are projected to rise by 9.1 per cent in 2027, as employers maintain stable compensation budgets while navigating growth ambitions, escalating workforce costs, and intensifying competition for skilled talent, according to a new industry report released on Wednesday, 14 October 2026. The forecast, drawn from global professional services firm Aon's Annual Salary Increase and Turnover Survey for India 2026-27, is broadly in line with the actual average salary increase of 9 per cent recorded in 2026.

Survey Scope and Methodology

The survey analysed compensation data from more than 1,200 organisations spanning 45 industries, positioning it as one of India's most comprehensive salary benchmarking studies. The breadth of the data set lends credibility to the projections, capturing both large conglomerates and mid-sized employers across diverse sectors.

Sector-wise Salary Growth Leaders

Among sectors, non-banking financial companies (NBFCs) are projected to lead salary growth in 2027 with increments of 10.1 per cent. The energy sector is expected to follow closely at 9.9 per cent, while real estate and infrastructure are forecast at 9.8 per cent. According to the report, strong domestic consumption, sustained investments, and export growth continue to underpin business confidence, enabling companies to invest in talent even as cost discipline tightens.

Roopank Chaudhary, Partner and Rewards Consulting Leader for Talent Solutions India at Aon, noted that employers are increasingly adopting a targeted approach to compensation. 'Strong domestic consumption, sustained investment and export growth continue to support business confidence, allowing employers to invest in talent while maintaining cost discipline,' Chaudhary said. He added that 'a modest rise in non-merit adjustments, particularly in manufacturing and technology, reflects greater focus on market alignment, scarce skills and critical talent.'

Attrition on the Rise

The report flagged a notable uptick in workforce churn. Overall attrition climbed to 18 per cent in 2026, up from 16.2 per cent in 2025 and 17.1 per cent in 2024. This three-year upward trend suggests that salary increments alone may not be sufficient to retain employees, particularly in high-demand skill areas. The growing attrition rate is placing additional pressure on HR budgets and is likely a key driver behind the shift toward more targeted, performance-linked pay structures.

AI Adoption Reshaping Compensation Strategy

A significant finding of the survey is the rapid integration of artificial intelligence tools into workplace operations. Established adoption of AI productivity tools rose to 56 per cent in 2026, up from 46.1 per cent a year earlier, with deployment expanding across all major job categories tracked in the study. This rapid uptake is beginning to reshape how employers value and price specific roles, with technology and manufacturing sectors showing the sharpest shifts in pay benchmarking.

Amit Kumar Otwani, Associate Partner, Talent Solutions India at Aon, cautioned that compliance alone would be insufficient. Employers must, he said, assess the broader workforce and cost implications of the Wage Code while ensuring effective communication with employees about compensation changes.

What This Means for Workers and Employers

For India's estimated formal-sector workforce, a 9.1 per cent projected hike — if realised — would broadly keep pace with or modestly outstrip current inflation levels, preserving real wage gains. However, the rising attrition rate and growing AI-driven restructuring of job categories mean the headline figure masks significant variation across roles and industries. How companies translate budget stability into meaningful talent retention will be the defining compensation challenge of 2027.