Merchant died at a London hospital Wednesday, surrounded by friends and family, a spokesman at Merchant-Ivory's London office said.
Indian television news reported that Merchant had been unwell for some time and recently underwent surgery for abdominal ulcers.
Bombay-born Merchant and Ivory, an American, made some 40 films together, including "A Room With a View," "The Remains of the Day," "Howards End" and "Heat and Dust."
Merchant generally served as producer, the business mind behind the collaboration, while Ivory directed.
The pair won six Oscars since their famous partnership began in 1961 with German-born screenwriter Ruth Prawer Jhabvala.
Their hits, especially E.M. Forster adaptations such as "Room With a View" and "Howards End," helped revive audiences' taste for well-made, emotionally literate period dramas.
In an interview with The Associated Press last year, Merchant said Merchant-Ivory films worked because they captured great stories.