A novel Maximum Torque Per Ampere (MTPA) based Direct Torque Control (DTC) scheme is proposed in this paper, for a two-level inverter fed Induction Motor (IM) drive, suited for Electric Vehicle (EV) applications. In the EV applications, reference torque is slowly varied, which opens up the option to control the flux reference in order to incorporate MTPA condition, facilitating improvement in IM efficiency. Firstly, flux reference changes needed to realize MTPA condition are derived in synchronous reference frame and then appropriately translated to the stationary reference frame so as to be adopted for DTC for controlling both torque and flux in the IM. With this relation, an MTPA controller is designed along with a feedback-linearizing controller. The performance of the IM with the proposed MTPA based DTC is tested initially for smooth varying torque reference and results are presented that clearly demonstrates a much lower current drawn from the inverter drive when compared with the use of conventional DTC scheme. This may lead to improved energy savings. To ascertain the benefits obtainable with the envisaged MTPA based DTC scheme for EV applications, the motor drive is tested and experimental results are presented with the European Union (EU) urban drive cycle data. © 2018 IEEE.