An induction stove works on the principle of electromagnetic induction. A metal coil is kept just beneath the cooling surface. It carries alternating current (AC) so that AC produces an alternating magnetic field. When you keep a metal pan with water on it, the varying magnetic field beneath it crosses the bottom surface of the pan and an EMF is induced in it. Because the pan is made up of metal the induced EMF generates an induced current in it. Since the pan has a finite resistance, the flow induced current in it produces heat in it and this heat is conducted to the water. That's why we call this stove as induction stove.