Stable Salary Increases Expected in India's 2026 Appraisal Cycle

As India enters its annual appraisal cycle, the Deloitte India Talent Outlook 2026 reveals that salary increases are expected to remain stable, with an average hike of 9.1%. Companies are focusing on performance-based increments, leading to a more selective distribution of raises. While sectors like financial services are offering stronger increments, technology firms are adopting a cautious approach. Promotions are on the rise, but attrition rates are also increasing, reflecting a complex labor market. The emphasis on skills development and digital learning is reshaping workforce training, indicating that high performers will benefit the most from these changes.

By Narendra Chaudhary Apr 6, 2026, 19:17 IST

Overview of Salary Trends in India

The annual appraisal cycle in India is currently in progress, and initial indications reveal that salary hikes are likely to remain stable this year. The Deloitte India Talent Outlook 2026 report highlights that companies are adopting a careful yet steady approach to salary increases, influenced by economic stability and changing workforce expectations. The report states, “In light of a robust macroeconomic environment and sector-specific growth trends, salary increment budgets across Indian companies are projected to remain stable in 2026.”

According to the report, organizations are anticipating an average salary increase of 9.1% in 2026, which is a slight rise from last year's 9%. However, this stability is accompanied by a heightened focus on performance and efficiency. Companies are striving to balance employee rewards with financial prudence, emphasizing the retention of key talent while ensuring that productivity improvements justify any salary increases.

Sector-Specific Salary Trends

Different sectors are exhibiting varied trends. The financial services and manufacturing sectors are providing relatively higher salary increments to facilitate growth and recruitment. Conversely, technology companies are adopting a more cautious approach, reducing their projected salary hikes compared to the previous year.

Performance-Based Increments

A significant change this year is the method of distributing salary increments. Instead of uniform increases, organizations are increasingly differentiating raises based on employee performance. The report indicates that companies are “rewarding high performers and critical skills more aggressively by refining the bell curve.” Anandorup Ghose, a Partner at Deloitte India, noted that many organizations have reverted to a narrow range of salary increases annually, resulting in a smaller group of top performers receiving a larger portion of the increment pool.

Promotions and Attrition Rates

Interestingly, while the number of top ratings has decreased, promotions have seen an uptick. The percentage of employees receiving promotions increased to 14% in 2025, up from 12% the previous year, indicating that companies are recognizing both current performance and future potential. However, this trend carries risks, as organizations must manage promotion strategies carefully to prevent long-term title inflation.

At the same time, attrition rates have slightly risen to 17.6%. This increase is not solely due to aggressive hiring but is also linked to layoffs across various sectors, reflecting a rise in involuntary exits. The report emphasizes that companies are not responding with significantly higher salary increases, suggesting a stabilizing labor market with improved talent availability.

Focus on Skills and Digital Learning

Skills Development and Training

Another notable trend is the increasing emphasis on skills-based workforce development. Companies are adopting structured competency frameworks that integrate both technical and behavioral skills. Digital learning is becoming prevalent, with nearly 70% of training now conducted virtually. While this enhances accessibility and scalability, organizations recognize that in-person training often yields better results.

Despite these advancements, challenges remain. Many companies continue to face difficulties in identifying skill gaps, adapting to rapidly evolving technologies, and assessing the effectiveness of training programs. For employees, the takeaway is clear: while average salary increments may appear stable, actual outcomes will differ significantly. High performers and those with sought-after skills are likely to see the most substantial benefits, while others may experience more modest increases.