in this paper, rotor flux based-model reference adaptive system (MRAS) has been used for speed estimation in speed sensorless operation of induction motor (IM) fed by three level diode clamped inverter (3LDCI). In order to improve dynamic response of IM along with decoupled flux and torque characteristics, indirect vector control is implemented. Modulation technique is important as machine current and voltage response can be improved. Inverter is controlled by Space vector modulation (SVM) and sinusoidal pulse width modulation (SPWM) technique. To enhance low speed performance of IM novel RF-MRAS reference modal and PI controller is used as adaption mechanism. The SVM based drive performance is compared with SPWM in MATLAB/Simulink at different operating conditions.