The concept of Industry 4.0 is flexible monitoring, uninterrupted services, cost-effectiveness, and things connected to networks. Industrial drives with various sensing and controlling units are the key components of every industrial process. In electric drive, the current sensor and speed encoder are used for controlling the system. A fault in the sensing unit could interrupt the process, which causes production losses. In this paper, a fast and smooth switching control strategy is designed and deployed for induction motor drives (IMD) to enhance system reliability and provide uninterrupted services. Based on supervisory decisions, suitable control strategies such as field-oriented control, slip compensation, and scalar control are chosen as alternatives during sensor failure. The adaptive reconfigurable fault-tolerant control technique (ARFTC) is employed for IMD, which can mitigate the transient issues while transitioning between different controls. This ARFTC scheme involves the DC-type feature of the synchronous-frame voltage commands (Vds∗,Vqs∗) and the synchronization of the rotor angle between the different control strategies. Under sensor-fault conditions, ARFTC enables better performance on the drive. Furthermore, cost-effective IoT monitoring services are integrated into the system for analyzing the performance of the drive. The proposed ARFTC is deployed in real-time on the industrial drive VLT-302 using the dSPACE MicroLabBox controller and Alborg interfacing and protection card. The proposed adaptive scheme is experimentally evaluated with a 2.2 kW squirrel cage induction motor under various sensor fault conditions. The obtained results shows that the proposed ARFTC is constructive for enhancing the reliability of induction motor drives, especially in sensor failure situations.