This work proposes an air-gap torque (AGT) based method for efficiency and torque estimation of induction motors. A new concept of stator resistance including the mechanical losses effect is presented. This modified stator resistance is estimated through a Particle Swarm Optimization (PSO) approach. The proposed methodology only relies on line currents, line voltages and nameplate data, which is appropriate for in-service applications. Finally, simulation and experimental tests were conducted to validate the proposed method at different load conditions.