India salary hikes: 9.1% forecast masks a widening pay gap

Employers in India are expected to raise salaries by 9.1% in 2027, but that broadly stable average conceals an increasingly uneven distribution of increases. India Today, reporting on Aon’s Annual Salary Increase and Turnover Survey for India 2026–27, said demand for skills in artificial intelligence, data centres and semiconductors is helping sought-after workers secure higher rewards.

The survey analysed more than 1,200 organisations across 45 industries. Its forecast is only slightly above the actual 9% salary increase in 2026, as employers weigh higher input and energy costs against geopolitical uncertainty and risks to global trade.

Fewer companies in the middle

Almost 37% of companies are considering salary increases of at least 10%, up from 12% in the previous year. Meanwhile, about 38% plan increases in the 8–10% range, compared with 72% previously.

At the lower end, the share planning increases below 8% has risen from 16% to 25%—one in four companies. This group includes employers in information technology and IT-enabled services. The figures describe companies’ intended increases, rather than the proportion of individual workers who will receive each level of raise.

Non-banking financial companies lead the sector forecasts with increases of 10.1%, followed by energy at 9.9% and real estate and infrastructure at 9.8%.

Scarce skills attract a premium

Amit Kumar Otwani, associate partner in Aon’s Talent Solutions practice in India, attributed the growing divergence to higher planned increments in emerging sectors such as data centres, semiconductors and quick commerce. He said workers with specialised, business-critical skills can negotiate better packages even in sectors where hiring is slowing.

As businesses invest in agentic AI, talent premiums for roles in AI, machine learning and data science have increased by approximately 10% from 2025, according to the reporting. That figure refers to the change in the premium attached to those roles, not a universal salary increase for everyone working in them.

Roopank Chaudhary, partner and rewards consulting leader in Aon’s Talent Solutions practice in India, said employers are directing compensation spending towards roles where it can deliver the most value. Manufacturing and technology companies, in particular, are adjusting pay against market rates and the difficulty of attracting or retaining scarce skills.

Turnover rises alongside pressure on purchasing power

Overall attrition rose to 18% in 2026 from 16.2% in 2025. Involuntary attrition also increased, reaching 4% from 3.4%, as layoffs grew. Even alongside those job losses, competition for talent continued to drive voluntary departures.

The report also cited projected inflation of around 5.1% in 2027, against 4.3% in 2026. Higher inflation would reduce the purchasing-power benefit of a nominal raise; it does not, by itself, mean that every employee’s pay will fall in real terms. That depends on whether an individual’s increase keeps pace with inflation.