This research examines how fluid damping loss affects the operation of a two-pole, 5.5 HP (4 kW) induction machine (IM) within the context of different slot opening configurations developed for downhole water pump applications. Since these motors operate with their cavities filled with fluid, the variations in fluid viscosity and density, compared to air, result in the occurrence of damping losses. Furthermore, this loss can be attributed to the motor’s stator and rotor surface geometry, as the liquid within the motor cavity moves unrestrictedly within the motor housing. This study involves the examination of the damping loss in a 24-slot IM under different stator slot indentations. The investigation utilizes computational fluid dynamics (CFD) finite element analysis (FEA) and is subsequently validated through experiments. The aim of this work is to emphasize the significance of fluid damping loss in submerged machines. Results reveal that the damping loss exceeds 8% of the motor output power when the stator surface has indentations, and it diminishes to 3.2% of the output power when a custom wedge structure is employed to eliminate these surface indentations.