Do Indians require Mexico transit visa for connecting flights in Mexico city?

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As of February 17, 2004 foreigners passing through one of Mexico’s international airports to a third country no longer require a visa or any migratory documentation, provided that they remain at the airport and depart Mexico within 24 hours of arrival. Source

However, it may only work if your luggage is checked automatically through, so that you don't need to collect it and check it in again. (You're sometimes going to be unable to do that without a visa.)

It's not a reliable source, but this post claims there is no transit area in Mexico City International Airport. So I would advise you to check this carefully with the airline and Mexican Embassy. You might need a transit visa.

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