Projected salary increases in India signal optimistic outlook for 2025, according to Mercer

Mercer has released its annual Total Remuneration Survey (TRS). The survey projects a 9.4% overall salary increase across industries in India for 2025, reflecting strong economic growth and an intensifying demand for skilled talent.

More than 1,550 companies in India participated in the survey, spanning diverse industries, such as technology, life sciences, consumer goods, financial services, manufacturing, automotive, and engineering.

Over last five-year period, salary increments have steadily increased rising from 8% in 2020 to a projected 9.4% for 2025. The Automotive sector leads with anticipated increments of 10%, up from 8.8%, driven by the surge in electric vehicles and government led “Make in India” initiatives. Manufacturing and engineering follow closely with increments rising from 8% to 9.7%, reflecting a resurgence in the manufacturing ecosystem.

In 2025, 37% of organizations plan to increase their headcount reflecting India’s vibrant talent demand across diverse sectors. Voluntary attrition is expected to stabilize at 11.9%, with Agriculture & Chemical (13.6%) and Shared Services Organizations (13%) experiencing the highest rates, indicating a competitive talent market. It is also expected some organizations will focus on strategic recruitment, competitive compensation, upskilling, and employee engagement to attract talent, reduce turnover, and sustain growth to address workforce demands.

Mansee Singhal, Mercer’s India Careers Leader, said, “India’s talent landscape is experiencing a remarkable transformation. Pay premiums are also reshaping the workforce, additionally, the increased adoption of performance-linked pay plans by more than 75% of organizations, signify a holistic shift towards performance orientation, both in the short term and long term. Companies that prioritize these trends will be better positioned to attract and retain talent in a competitive market.”

Mercer’s survey also examined the impact of Artificial Intelligence (AI), automation, and digital transformation on India’s talent landscape. India has emerged as a leading global hub for AI adoption, with 55% of organizations actively integrating AI into operations. CEOs in India anticipate AI to be one of the key drivers of growth and productivity in the coming years.

Malathi KS, Mercer’s Rewards Consulting Leader for cross industry, India, added, “The Total Remuneration Survey highlights the strategic shifts organizations are making to attract and retain top talent. From adopting AI-driven solutions for personalized rewards to redefining the Employee Value Proposition with flexibility and wellness at its core, businesses in India are prioritizing value-driven approaches. These trends reflect a transformative era for the workforce, positioning India as a talent hub.”

To support the adoption of emerging technologies, Mercer recommends organizations to conduct comprehensive skills assessments to identify existing gaps and future needs. Employers are also encouraged to invest in reskilling initiatives, focus on employee engagement, and refine their Employee Value Proposition (EVP) to address evolving workforce expectations.