The design of electrical drives capable of tolerating sensor faults has recently become very popular due to their possible use in Fault Tolerant Control systems. This paper introduces a virtual speed sensor design based on a nonlinear state estimation algorithm for fault-tolerant vector control for Induction Motor Drives after speed sensor faults. The rotor speed estimator is realized by integrating the Unscented Kalman Filter (UKF) and the Sliding Mode Observer (SMO) based only on the measurements of the stator current and voltage. This proposal is dedicated to maintain the proper behaviour of the Indirect Rotor Field Oriented Control of the induction motor drive, where it is necessary to switch to the nonlinear estimators as a result of damage to the speed encoder. Simulation studies of the proposed fault tolerant design are performed in the case of total and partial losses of the speed sensor in a closed loop control structure for different operating conditions of the drive system. Fault-tolerant designs based on the UKF and the SMO estimators show good performance in the presence of speed sensor faults in terms of stability, overshoot rate (less than 10%), and trajectory tracking over low and medium speed range. However, the SMO performance is reduced for high-speed operation (⍵r >1400rpm) over the UKF which maintain good performance over the entire speed range.