Recommendation Letter from a non-PhD referee I am applying for a PhD program and I am in the process of choosing people for recommendation letters. Being someone in the final year of  master's program (and not been involved with many people in research), one of my potential referee is my internship guide. I had worked with him closely for 3 months and a paper came out of the work.

He does not hold a PhD. He is not involved with research in a big way. He holds a Senior Manager post and possesses 20 years of experience. Although he can write a good recommendation letter, will it carry weight considering his background?
I would think at least twice about getting a letter of recommendation for admission to a PhD program in X from someone who does not themselves have a PhD in X or some closely related field.  (No PhD at all is to my mind no worse than a PhD in a totally unrelated field.)  The reason is that a grad school admission letter makes an argument that you (i) are a strong candidate for the program compared to the stream of candidates known to both the recommender and the readers in the department and (ii) will succeed in the program.  Someone who does not have a PhD in a closely related field to X is simply much less convincing with regard to (ii) than the majority of people who do.  One also worries about (i).

In my experience, all the letters you get for admission to a PhD program should address (i) and (ii) and not too much else.  Thus getting a letter from someone who directed a corporate internship you did or non-academic job you had or volunteer experience you have is a poor choice unless these experiences are directly, intimately related to (i) and (ii) above.  For instance if you are applying to a PhD program in chemical engineering then if you worked for a chemical engineering firm and did research that academic chemical engineers find significant (so especially if you published any academic papers), then great: get a letter from someone there, whether they have a PhD in that field or not.  Also, qualifications are correlated with credentials but not perfectly: everyone has their own example of a famous academic who happens not to have this or or that academic degree.  If you are interested in a program on the border of mathematics and philosophy and can get a recommendation letter from Saul Kripke, do it!  Don't be deterred by the fact that he doesn't have a PhD: that would be ridiculous.  

Back to your situation.  About your potential recommender, you write:


  He does not hold a PhD. He is not involved with research in a big way. He holds a Senior Manager post and possesses 20 years of experience.


This does not sound like a good choice.  By "not being involved in research in a big way", he cannot speak to your research potential as well as someone who is.  Since he does not have a PhD, the readers will probably wonder about how trustworthy he is (relative to other writers) when he insists that you will be successful in a PhD program.  Unless you have a good reason to believe that the faculty doing admissions will know this person personally and esteem him highly, I would avoid getting a letter from him.  However, if you feel like he is uniquely well qualified to speak to issues (i) and (ii), then it might be worth trying to have him give information to a more traditionally appropriate letter writer.