Here's what India Inc. is projecting for salary increment, promotions, attrition rates, talent development in 2026

March to April is performance review time for many employees across in India, and on average salary increments are expected to remain steady near 9% this year, with moderate differentiation across industries, according to a Deloitte report.

“Against the backdrop of a resilient macroeconomic environment and sector-specific growth dynamics, salary increment budgets across India Inc. are expected to remain stable in 2026,” as per the Deloitte India Talent Outlook 2026.

How much pay hike could employees see?

Findings indicated that companies are projecting 9.1% average pay hikes in 2026, against 9% the past year. The overall objective balances “need to retain critical talent with a strong push towards productivity and cost discipline”, it added.

Among industries, the financial services and manufacturing sectors are maintaining relatively higher pay increments to support growth and consequent hiring needs. On the other hand, tech companies are cautious, with both product and services sector players reducing projections by 10-70 basis points in 2026, compared to the previous year.

Employees of consumer sector companies are marginally better placed, with expected pay increase of around 40 bps; while life sciences and pharma companies are projecting around 10% hikes this year — among their highest on average, the findings indicated.

What criteria are companies using to implement pay hikes?

Overall, the report noted that salary increments remain stable and organisations “continue to reward high performers and critical skills more aggressively by sharpening the bell curve”.

Anandorup Ghose, Partner, Deloitte India, said, “The last few years have seen most organisations revert to operating within a narrow spectrum of salary increases every year.” This means, that those at the top of the curve take the meatiest chunk, as support for their performance and push for future contributions.

The survey found that the share of the employees with highest rating on a five-point performance scale declined 300 bps — from 10% in 2024 to 7% in 2025. Meanwhile, around 16% of the workforce is now categorised within the bottom two performance ratings.

“Decisions on talent and rewards have shifted as employees and companies are operating in a buyer’s market across most skill categories. There is a far greater focus on driving productivity and ensuring effective and directed skilling spends,” Ghose added.

What is the industry-wise increment projections for 2026?

Promotion rates on the rise but attrition also up

As per the report, while the proportion of employees receiving the top performance rating has declined, the share of employees promoted has increased from 12% in 2024 to 14% in 2025. Here too, manufacturing and operationally intensive organisations have observed higher level growth.

Notably, promotion rates are now nearly twice the proportion of top-rated performers. This means that companies are rewarding current top performers and future potential. It however cautioned that organisations would need to balance this approach carefully to avoid long-term title and designation inflation.

On attrition, the findings showed that numbers inched up 17.6% in 2025, compared to 17.4% in 2024. It however noted that the increase does not reflect significant upswing in hiring activity and attributed this to “growth in involuntary attrition” i.e. the recent layoffs across sectors.

“Companies are not reacting with proportionately higher increments, indicating that the labour market has stabilised. Talent supply has also improved, with a broader pool emerging from Tier-2 and Tier-3 cities and stronger campus hiring pipelines,” the report added.

Skills-based approach to talent development, digital adoption up

Further, the report added that organisations are rapidly embedding a skills-based approach to talent development, with competency frameworks now widely institutionalised. It added that around 75% of companies have both behavioural and technical competency frameworks, which are increasingly being integrated across performance management.

Further, the learning operating model has shifted to a digital mode with virtual learning now nearly 70% of training delivery. They did however acknowledge that in-person learning has greater outcomes.

In terms of challenges, while accessibility and scale issues have been solved, the more structural challenges remain unchanged. Among the most cited challenges include assessing skill gaps and keeping pace with rapidly evolving technologies, balancing business priorities with time for learning, and measuring the impact of learning initiatives.

Here, nearly 60% of companies reported assessing skill gaps and keeping pace with rapidly evolving technologies as the most important question.