New labour code will shrink your hike

India Inc. is expected to roll out an average increment of 8.5-9.5% in the upcoming appraisal cycle, as companies calculate the impact of the new labour code and almost-stag-nant inflation.

- Devina Sengupta

Like this year, 2026 is likely to remain an employer's market, with outliers being those in the pharmaceutical and consumer industries, according to staffing and headhunting firms. While companies are doing better and costs have eased, margin pressure persists, they said.

The average raises have cooled after the hiring frenzy of 2021 and 2022. The hikes in those two years were around 9.7% and 10.6%, respectively, according to consulting firm Aon, excluding inflationary adjustments. The increments in 2023 and 2024 were 9.7% and 9.3%, respectively.

"The multinationals (and a few Indian companies) will roll out hikes for 2026 over the coming quarter and we estimate it to be in the range of 8.5-9.5%," said Anandorup Ghose, partner with Deloitte in Human Capital Consulting. "This year, the companies are looking more optimistic but since inflation has remained steady, there is less reason to push for higher increments. However, the wage code has brought in additional expenses and that will get factored into the hikes."

Deloitte had estimated an average hike of 8.8% in 2025 and 9% in 2024 as companies navigated global and local headwinds.

India’s retail inflation has cooled, averaging 1.8% in the April-November period. The Reserve Bank of India (RBI) projects inflation at just 2% for full FY26 compared with 4.6% recorded in FY25.