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This paper presents an improved direct torque control (DTC) scheme based on indirect space vector modulation (ISVM) for matrix converter drives. Independent closed-loop control of both torque and stator flux is achieved by using two proportional-integral (PI) controllers. The reference voltages generated by the two PI controllers are provided for an ISVM unit which replaces the switching tables in the basic DTC scheme. The proposed DTC scheme is characterized by reduced torque and flux ripples, unity input power factor and sinusoidal input/output waveforms, while maintaining constant switching frequency and fast torque dynamics. To preserve the DTC transient merits, the ISVM is switched to an over modulation mode when the reference voltage exceeds the saturation point for PI regulators. Otherwise, the other two linear modulation modes, utilizing medium and maximum line-to-line voltages respectively, will be employed to improve the steady-state performance in the different range of output voltage.