Significant disadvantage applying in Round 2 for an Indian?

Yeah, if I don't get through, I want to re-apply for R1 next year but am wondering if I will be at a disadvantage or not as a re applicant?

I guess the point is a little moot since you've already applied in R2, and will probably apply again in R1 if you don't get in (I hope you do get in!).

Wharton is re-app friendly, though don't stress too much on the word "friendly". You still have to show significant improvement from where you were the year before. I'm not sure about Stanford. I have heard HBS is not re-app friendly, unless you've made some marvelous advancements within one year.

As for R1 vs. R2, my opinion is that it doesn't matter as long as you're not from an over-represented background. If you are Indian (esp male & IT), I believe you stand a better chance in R1.

So I was wondering if I should settle for the lower ranked universities (20-30) if I don't get through the top ones. In case I don't stand a better chance in re-applying next year, I will go for the 20-30 this year.

Oh and yes, I am from an over-represented background

Whether you are from an overrepresented applicant pool or not, there is no concrete data anywhere that suggests one might have a better chance of getting in R1 vs R2. For most schools, including the schools that you mentioned, R1 and R2 chances are pretty much the same that it won't have much (visible) effect on your candidacy. For either one of the schools, if you are at least WL'ed, then it probably means that you are a competitive applicant and you should consider re-apping next year. But to get a sense of where, in terms of the tier of applicant pool, you have to apply to lower ranked schools (compared to Stanford or Wharton) as well to see where you can get in. It doesn't make any sense to apply to top 2 schools and then end up attending 20-30 ranked schools for no reason whatsoever.