India’s automotive sector is set to maintain its strong compensation momentum into FY26, with projected average salary hikes of 10.1%, according to Deloitte’s Performance and Rewards Trends Study. This marks the fifth consecutive year of double-digit salary increases in the auto sector, positioning it well ahead of the overall India Inc average hike of 8% across all industries.

The findings, reported in The Economic Times, underscore a resilient and evolving automotive industry, one that is being driven not only by record export growth but also by transformational shifts in talent requirements, especially in areas like electric vehicles (EVs), automation, artificial intelligence (AI), and machine learning (ML).

A Five-Year Streak of Double-Digit Hikes

According to Mr. Neelesh Gupta, a Partner at Deloitte India, the auto sector's consistent high salary growth is largely attributed to its ongoing transformation and premium placed on specialized skillsets. However, there has been a moderate decline in the rate of increase, with FY26’s forecast of 10.1% slightly below FY25’s 10.5%.

Despite this moderation, the auto industry remains among the top-paying sectors in India. While some companies closed their appraisal cycles by March 2025, others are slated to finalize salary revisions post-June, depending on their financial year-end schedules.

Demand Surge for Specialized Talent

The rising demand for digital and technical talent—especially those experienced in electric mobility, AI-enabled product engineering, and smart manufacturing technologies—has catalyzed a war for top-tier roles. HR executives from Hyundai Motor India Ltd and Skoda Auto Volkswagen India Pvt Ltd confirmed that salary hikes are being skewed higher for niche and critical skill positions.

In fact, top performers—especially those operating in EV engineering, embedded systems, and AI-based diagnostics—are likely to see increments well beyond 10%, as companies seek to retain competitive talent in a tight labor market.

This trend mirrors global shifts where mobility tech and sustainable engineering are driving massive investment and innovation, further pushing compensation benchmarks upward.

Exports and Sectoral Growth

Complementing the salary trends is the strong export performance of the Indian auto sector in FY25. According to data from the Society of Indian Automobile Manufacturers (SIAM):

• Overall automobile exports rose by 19%, reaching 5.3 million units, up from 4.5 million units in FY24.

• Passenger vehicle exports increased by 15%, totaling 7,70,364 units, indicating buoyant global demand for Indian-manufactured vehicles.

These numbers reflect the sector’s growing global competitiveness and manufacturing strength, which further bolsters revenue, enabling higher compensation levels and incentivizing talent development.

Auto vs IT: Diverging Compensation Outlooks

While the auto sector enjoys positive compensation trends, the IT services industry appears more cautious. Global macroeconomic pressures, coupled with AI-driven automation, are expected to keep salary hikes in the IT sector between 4% and 8.5% in FY26. This shift suggests a more sustainable, performance-linked compensation strategy in IT, as companies reassess human capital needs in an AI-augmented work environment.

In contrast, the automotive industry’s need for human intelligence to build intelligent systems—particularly in design, embedded tech, hardware-software integration, and smart factories—has elevated its compensation trajectory beyond other sectors.

Talent Strategy for the Auto Sector

To sustain this talent growth trajectory, auto companies are now:

• Investing heavily in upskilling initiatives to prepare engineers and technologists for next-gen mobility.

• Revisiting total rewards frameworks, aligning variable pay with performance in EV innovation and sustainability KPIs.

• Exploring cross-industry recruitment, bringing in talent from sectors like aerospace, defense, and software engineering.

This is being coupled with broader organizational restructuring, where digital transformation teams, R&D hubs, and global delivery centers are becoming central to workforce planning.

Rebranding India's Automotive Industry

The automotive industry in India is transitioning from being a legacy manufacturing powerhouse to a mobility technology innovator. With EV adoption rising, connected vehicles gaining traction, and autonomous driving prototypes in the works, India’s talent needs are increasingly high-tech.

This rebranding is not only attracting fresh graduates from premier institutes like IITs and NITs, but also leading to lateral movement of experts from global automotive giants and tech firms.

The salary hike forecasts thus mirror the industry’s strategic pivot, where technology, engineering innovation, and digital fluency are the new frontiers for success.

Outlook for FY26 and Beyond

As the industry prepares for FY26, India’s auto sector is expected to:

• Continue double-digit compensation growth, especially for high-performing individuals in EV and smart tech domains.

• See increased investments in in-house innovation labs, partnerships with academia, and R&D collaboration with startups.

• Focus on talent retention programs, including stock options, flexible work models, and global rotation programs.

In parallel, public policy and government incentives in EV manufacturing, PLI schemes, and green mobility will further support the ecosystem, thereby sustaining salary growth trends.

Conclusion

India’s automotive industry is on a path of transformational growth, underpinned by technological disruption, surging exports, and strong domestic demand. The forecasted 10.1% average salary hike for FY26, according to Deloitte, signals confidence in the sector’s resilience and commitment to talent as a strategic asset.

As global and domestic trends converge around EVs, AI, and automation, the auto industry continues to lead India's compensation landscape—rewarding performance, encouraging innovation, and building the workforce of the future.

This sustained salary growth is not just a number—it reflects a deep structural shift in how the automotive sector sees its future: digitally empowered, globally competitive, and human capital-centric.

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