diff --git a/dvc/external_repo.py b/dvc/external_repo.py
index 61b4a85f3..e4f6586b1 100644
--- a/dvc/external_repo.py
+++ b/dvc/external_repo.py
@@ -70,18 +70,21 @@ def _external_repo(url=None, rev=None, cache_dir=None):
         _git_checkout(new_path, rev)
 
     repo = Repo(new_path)
-    # Adjust original repo for pointing remote towards its' cache
-    original_repo = Repo(url)
-    rconfig = RemoteConfig(original_repo.config)
     try:
-        if not _is_local(url) and not _remote_config_exists(rconfig):
-            # check if the URL is local and no default remote
-            # add default remote pointing to the original repo's cache location
-            rconfig.add("upstream",
-                        original_repo.cache.local.cache_dir,
-                        default=True)
-            original_repo.scm.add([original_repo.config.config_file])
-            original_repo.scm.commit("add remote")
+        # check if the URL is local and no default remote
+        # add default remote pointing to the original repo's cache location
+        if not os.path.isdir(url):
+            # Adjust original repo for pointing remote towards its' cache
+            original_repo = Repo(url)
+            rconfig = RemoteConfig(original_repo.config)
+            if not _remote_config_exists(rconfig):
+                rconfig.add(
+                    "upstream",
+                    original_repo.cache.local.cache_dir,
+                    default=True,
+                )
+                original_repo.scm.add([original_repo.config.config_file])
+                original_repo.scm.commit("add remote")
 
         if cache_dir is not None:
             cache_config = CacheConfig(repo.config)
@@ -89,7 +92,6 @@ def _external_repo(url=None, rev=None, cache_dir=None):
     finally:
         # Need to close/reopen repo to force config reread
         repo.close()
-        original_repo.close()
 
     REPO_CACHE[key] = new_path
     return new_path
@@ -144,20 +146,3 @@ def _remote_config_exists(rconfig):
     except ConfigError:
         default = None
     return True if default else False
-
-
-def _is_local(url):
-    """
-    Checks if the URL is local or not.
-    Args:
-        url: url
-
-    Returns:
-        True, if the URL is local else False
-    """
-    remote_urls = {"azure://", "gs://", "http://", "https://",
-                   "oss://", "s3://", "hdfs://"}
-    for remote_url in remote_urls:
-        if url.startswith(remote_url):
-            return False
-    return True
diff --git a/tests/conftest.py b/tests/conftest.py
index 46b059d5e..3eca524c0 100644
--- a/tests/conftest.py
+++ b/tests/conftest.py
@@ -7,7 +7,6 @@ import pytest
 from git import Repo
 from git.exc import GitCommandNotFound
 
-from dvc.remote.config import RemoteConfig
 from dvc.remote.ssh.connection import SSHConnection
 from dvc.repo import Repo as DvcRepo
 from dvc.utils.compat import cast_bytes_py2
@@ -148,11 +147,6 @@ def erepo(repo_dir):
         repo.dvc.scm.add([stage_foo.path, stage_bar.path, stage_data_dir.path])
         repo.dvc.scm.commit("init repo")
 
-        rconfig = RemoteConfig(repo.dvc.config)
-        rconfig.add("upstream", repo.dvc.cache.local.cache_dir, default=True)
-        repo.dvc.scm.add([repo.dvc.config.config_file])
-        repo.dvc.scm.commit("add remote")
-
         repo.create("version", "master")
         repo.dvc.add("version")
         repo.dvc.scm.add([".gitignore", "version.dvc"])