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This paper presents a new control strategy for three-phase induction motor which includes independent speed & torque control loops and the current regulation thereby overcoming the limitation (i.e. sluggish response) of volts per hertz controlled industrial drives. For close-loop control, the feedback signals including the rotor speed, flux and torque are not measured directly but are estimated by means of an algorithm. The inputs to this algorithm are the reconstructed waveforms of stator currents and voltages obtained from the DC link and not measured directly on stator side. The proposed drive thus requires only one sensor in the DC link to implement the close-loop speed and torque control of a three-phase induction motor. The simulation results on a 2.2 kW induction motor drive in Matlab/Simulink software show fast dynamic response and good agreement between the actual values and the estimated values of torque and speed. Replacement of the open-loop control strategy of existing v/f drive by the proposed close-loop strategy appears to be possible without requiring any additional power components and sensors.