India Inc braces for muted salary hikes in 2027 as costs rise, hiring slows

Higher crude oil prices amid the West Asia conflict, inflation that surged to a two-year high in September, the Reserve Bank of India’s rate increase and changing attrition trends are converging to complicate salary decisions. With consumer demand under pressure and businesses becoming more cautious about spending, companies are likely to exercise greater discipline in compensation budgets, even as they compete to retain critical talent.

Consulting firms Deloitte and WTW (Willis Towers Watson) expect average salary increases to remain flat in 2027. Aon, meanwhile, projects nominal salary hikes of 9.1%, broadly in line with 2026, and real wage growth, adjusted for inflation, of 5.1%, from 4.3% in 2026. In banking, salary increases could average 6-7% in FY27, down from 8-9% in FY26, according to recruitment firm ABC Consultants. Employers typically roll out annual increments in April-May, though some do so a few months later. Work on salary hikes, promotions and bonuses, however, has already begun.

Higher crude oil prices linked to the West Asia conflict are pushing up input costs and weighing on companies’ investment appetite. A subdued festive season, which runs from September to December and peaks around Diwali, adds to the concerns.