"We have mutually agreed to bring our fruitful 25-year relationship with Kempinski Hotels to a close, effective October 1.
Following a progressive phase-out which began in 2012, the agreement will allow The Leela to further consolidate its network, while facilitating Kempinski's direct entry into the domestic market," Leela said in a statement.
Commenting on the decision, Leela founder and chairman emeritus Capt CP Krishnan Nair said "the strong cooperation enjoyed by the two luxury brands over more than two decades has immensely benefited both The Leela and Kempinski, and helped significantly increase brand awareness globally and in the domestic market."
The debt-laden Leela owns and operates eight luxury properties.
Kempinski Hotels president and chief executive Reto Wittwer said: "We are proud of the rewarding relationship we had with the Leela."
The debt-laden Leela owns and operates eight luxury properties spanning Mumbai, New Delhi, Bangalore, Chennai, Udaipur, Goa, Kovalam (Kerala, which is being managed by it) and Gurgaon.
The group is developing properties at Jaipur, a 60-room Palace property, Bhartiya City near the Bangalore airport, an Agra hotel that has every room facing the Taj, Noida near Delhi and Lake Ashtamudi in Kerala.