Salaries in India are set to rise by 9.2% in 2025, a slight decline from the increase of 9.3% in 2024, amid global uncertainty and softening growth, according to the latest report by global professional services firm Aon.

The study, which analysed data from over 1,400 companies across 45 industries, says there has been a trend of declining salary increments since 2022 when companies provided 10.6% salary increases influenced by the Great Resignation.

Salary increments are also projected to vary across industries with engineering design services and auto/vehicle manufacturing budgeting for the highest salary increases followed by nonbanking financial companies, retail, global capability centres and life sciences.

“Despite external uncertainties, India’s economic prospects remain stable, with rural demand improving and private consumption maintaining momentum. The downward trend in projected salary increases could be in response to external factors like the geopolitical and economic developments, the potential impact of U.S. trade policies, conflict in the Middle East and the explosive pace of generative AI advancements,” said Roopank Chaudhary, partner and rewards consulting leader for Talent Solutions for India at Aon.

He adds: “Our data shows that moderation in salaries is an expected outcome given the margin pressures on companies. The sector-wise increment trends for 2025 reflect prudence and adaptability as companies balance market challenges and the need to attract and retain talent across sectors.”

The study reveals overall attrition rates declined to 17.7% in 2024 from a high of 18.3% in 2023 and 21.4% in 2022, indicating the availability of a larger talent pool post the Great Resignation. "This stability in talent availability is an outcome of increased labour force participation despite a rise in self-employment and entrepreneurial activity, which presents an opportune time for companies to focus on strategic workforce skilling, reskilling and institutional support," says the report.

“In a globally interconnected world, shifting governments, businesses and workforce behaviours and expectations could impact the Indian economy and subsequently the local talent landscape. A comprehensive analysis of market behaviours, robust datasets and advanced technology are essential to anticipate shifts and prepare accordingly,” said Amit Kumar Otwani, associate partner for Talent Solutions for India at Aon. “Adopting a hands-on approach to total rewards and compensation practices and leveraging AI-driven innovation will enable India Inc to achieve sustainable growth in an increasingly automated environment.”

The Aon data on actual salary increases in India for 2024 and the projected salary increases for 2025 across various industries shows the engineering design services (10.1%), automotive/vehicle manufacturing (10.7%), and nonbanking financial companies (10.1%) sectors saw the highest salary hikes in 2024, with similar strong growth expected in 2025.

The retail (9.6%), global capability centres (9.4%), and engineering/manufacturing (9.7%) sectors also experienced steady salary growth. Technology consulting and services (7.6%) had the lowest salary increment in 2024, with a marginal improvement projected for 2025 (7.7%). While most industries are expected to witness minor fluctuations, e-commerce (9.1% to 9.3%) and chemicals (8.6% to 9.2%) are among those expecting a stronger increase in 2025.