India Inc. is projected to offer average salary increments of 8.5% to 9.5% in 2026, a slight moderation from previous years as companies factor in the impact of the new labour code. These raises follow a hiring frenzy in 2021 and 2022 that saw hikes reach 10.6%. Staffing experts describe 2026 as an “employer’s market,” although the pharmaceutical and consumer industries are expected to remain outliers with higher potential raises.
The implementation of the new labour code is a primary factor in these projections, as it may lead to higher social security contributions for companies and impact liabilities for leave and gratuity. For employees, the code could increase taxable salary and superannuation contributions, potentially reducing take-home pay. Additionally, steady inflation (averaging 1.8% between April and November) has reduced the pressure on companies to push for larger inflationary adjustments.
Market sentiment remains cautiously optimistic, bolstered by strong festive season sales during Diwali 2025, which exceeded ₹16 trillion. Some sectors, including non-banking financial companies, real estate, and life sciences, are forecasted to offer better hikes than others. While average hikes are cooling, employees at the minimum wage level may see higher increases ranging from 14% to 15%.