Error uploading sketch to ATMEGA2560.

Error: .
avrdude: stk500v2_ReceiveMessage(): timeout

Equipment used:
ATMEGA2560 Breakout (includes onboard 16MHz oscillator, all the required 01.uF caps & a 10k resistor for reset it also has a reset button)
link:

FTDI Breakout: FT232RL chip on board to be used with 5V (it has these pins on board: DTR,RXI,TXO,5V,CTS,GND)
link:
http://www.amazon.in/Breakout-Serial-L-type-Arduino-interfacing/dp/B00V61Y6E8?tag=googinhydr18418-21

Connections made:
RXI (FTDI) -> TX0 (PIN 3 on ATMEGA2560)
TXO (FTDI) -> RX0 (PIN 2 on ATMEGA2560)
5V (FTDI) -> 5V (5V pin on breakout of ATMEGA2560)
GND (FTDI) -> GND (GND pin on breakout of ATMEGA2560)
DTR (FTDI) -> Not Connected
CTS (FTDI) -> Not Connected

Software:
The atmega2560 was flashed with stk500v2 bootloader from Nick Gammon's blog. Gammon Forum : Electronics : Microprocessors : Atmega bootloader programmer

So there's my setup. This is what I did, I installed the required FTDI drivers for my mac (running OSX 10.11.2) and I tried to upload the Blink Sketch from examples in Arduino IDE to this breakout. I tried three ways:

  1. As soon as the sketch compiled and started to upload I pressed the reset button on my breakout and let it go instantly.
  2. As soon as the sketch compiled and started to upload I held the reset button pressed for a few seconds.
  3. I pressed reset even before the sketch compiled.
    All these 3 methods gave me the same error as mentioned. I din't try the Auto-reset technique yet ( by pulling the reset pin of ATMEGA2560 low). But this should have worked so far, why hasnt it?

Hi,
You gave the link to a board with 14.7456MHz crystal, is that is the problem?
Other thoughts:
Connect the CTS to GND.
Auto reset: connect DTR to a 0.1uF capacitor, and connect the other leg of the capacitor to Reset on the Mega board.
On the Installation and Troubleshooting forum there is a pinned message called Loop-Back Test Instructions. I recommend trying out the loop back test on your FTDI adapter to make sure it's working ok.

Are you sure the 2560 has a bootloader on it?
You'll likely need to change CPU speed to 14.7456MHz (14745600) to match the crystal in boards.txt for the Mega and burn a bootloader onto the chip before serial loading will work. I don't know if Serial and millis() and micros() will work correctly at that crystal speed.

How much is "Price: Rs.999.00" in US dollars? Just curious.
999 Rupee ~ $15?

@dmjlambert : Yeah it isn't 16MHz, I figured that was an issue. Will try to do the second half and see if it responds then. I did perform the loopback test on my adaptor (just shorted tx-rx), It passes the test. I'll get the 0.1uF cap and try to the rest and see what happens.

@CrossRoads: I found the boards.txt file, changing that cpu speed will it not affect my other mega? Everytime I upload a sketch to different megas I'll need to keep changing the speed in that file? . And yes it is 15$ USD, everything is expensive here.

Update: I did try changing the speed and reuploaded the bootloader and tried to upload the sketch again, I still get the same error.