Dear Mr. Lakshmi Gopal,
I will repeat my sentence here, both the things should not be mixed.
If you had offered increase in notice period first and not declared increament at the same time, you can have revised / reassess the thought of increament.
It's but natural that every body looks for their benefit, Employee looks for increament and you are looking for his acceptance of the letter.
Second thign increment should not be given conditional. You had offered two things at the same time and it is up to the employee, eighter accept one or both.
Management has not eyes, it can hear only. Put your legs in the same shoe and you will realise the fact immediatly.
This is like, there is only a perfact man in the world, that every mother has. Mother can not say any thing for his child except goodness.
Thanks / Regards