Salaries in India to increase 9.2% in 2025 amid global uncertainity, Aon says

Salaries in India are expected to increase by an average of 9.2% in 2025, slightly lower than the 9.3% raise seen last year, according to a study by global professional services firm Aon plc.

The firm’s Annual Salary Increase and Turnover Survey for 2024-25 analyzed data from more than 1,400 companies across 45 industries.

It suggests that while global uncertainty and slower economic growth have led to smaller pay hikes than in previous years, India remains on a relatively stable path.

Economic outlook and declining attrition

Aon reports that salary increments have been declining since 2022, when the market offered an average 10.6% increase, spurred by the wave of resignations seen during the “Great Resignation.” Attrition has also eased in India Inc., falling to 17.7% in 2024 from 18.7% in 2023 and 21.4% in 2022.

Roopank Chaudhary, partner and rewards consulting leader for Talent Solutions for India at Aon, says the downward trend in projected salary increases could be related to geopolitical tensions, changes in U.S. trade policies, the conflict in the Middle East and the rapid development of generative AI.

However, he notes that India’s economic outlook remains steady because of improving rural demand and strong private consumption.

Variations by industry

The study highlights that some sectors will continue to see higher pay hikes than others. Engineering design services and auto/vehicle manufacturing are predicted to offer the biggest increases at 10.2%.

Non-banking financial companies are expected to follow closely with a 10% raise. Chaudhary explains that these trends reflect a balance between market challenges and the need to attract and retain skilled talent.

Many companies are also dealing with margin pressures, prompting them to be cautious in their salary budgets while still remaining competitive.

Importance of total rewards and AI

Aon recommends that companies focus on total rewards, which goes beyond basic pay and includes benefits, career development and other forms of recognition. Leveraging AI-driven innovation can also help firms make more accurate decisions about compensation and other human resource strategies.

Amit Kumar Otwani, associate partner for Talent Solutions for India at Aon, says shifting government policies and workforce expectations can influence the Indian economy and local talent market, so having robust datasets and advanced technology is vital in planning ahead.

Stable growth ahead

The study, which is now in its 30th year, indicates that India’s salary growth may be moderating but remains relatively healthy compared to many other markets.

Although uncertainty persists worldwide, companies are showing confidence in India’s long-term potential by adjusting their pay strategies rather than cutting them drastically.

Aon believes that focusing on thoughtful compensation practices, supported by data and technology, can help employers and employees navigate this period of economic change while positioning India Inc. for stable and sustainable growth.