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In this paper, a new efficiency-optimized space-vector-modulation direct torque control (DTC) scheme is proposed and implemented for induction motor drives. Different from the traditional DTC, in which the flux linkage reference value is set as the rated value, the flux linkage reference value in the proposed DTC is online updated according to the instantaneous load torque and rotational speed by the optimum efficiency unit. Also, the space vector modulation is incorporated to achieve constant switching frequency regulation as well as reduced torque ripple. Simulation and experimental results are given to verify that the proposed scheme can successfully minimize the total power loss, while retaining good dynamic performance.