This paper proposes a new method for sensorless speed control of a field oriented vector control of Induction motor drive using fuzzy controller for speed control and model reference adaptive controller (MRAC) for speed estimation. Speed estimation using flux and back EMF based MRAC has poor tracking at low speeds. Also, reactive power based MRAC has stability problems. To overcome this, a new X-MRAC controller is designed which uses reference stator voltages and actual stator current for estimating the speed. This makes sensorless drive stable in all the four quadrants of operation. Conventional PI controller is replaced by Fuzzy controller to improve performance of induction motor. The simulation of proposed model is done using MATLAB/SIMULINK. From the analysis, it can be observed that the proposed system gives better response than conventional PI controller and requirement of no additional sensors make the drive suitable for high performance applications. The simulation results prove the effectiveness of the proposed system.